(L-R) Lindner, Habeck and Scholz © Juergen Nowak / Shutterstock
(L-R) Lindner, Habeck and Scholz © Juergen Nowak / Shutterstock

Germany agrees hydrogen-ready power plant subsidy plans

Berlin has agreed plans to subsidise up to 10GW of hydrogen-ready gas power plants and “dismantle” construction and operation barriers for electrolysers. Updated below*.

Chancellor Olaf Scholz, Economics Minister Robert Habeck and Finance Minister Christian Lindner agreed on Germany’s power plant strategy to develop “highly flexible and climate friendly” power plants.

As part of the plans, the top team agreed that four new 2.5GW power plants will be put out to tender as hydrogen-ready soon, without confirming a date.

The Ministry for Economic Affairs and Climate Action (BMWK) said plans to transition the plants to hydrogen should be confirmed by 2032 to complete the switch to the energy carrier between 2035 and 2040.

Additionally, the ministry plans to support the development of new plants that run “exclusively” on hydrogen with a capacity of up to 500MW for research purposes.

*It has been reported the government will offer up €16bn ($17.1bn) of subsidies for the new plants, with funding due to come from the Climate and Transformation Fund.

The strategy come as an important part of Berlin’s plans to convince coal states to phase out coal-fired stations ahead of the official date of 2038.

In August 2023, the BMWK said it wanted to tender for 8.8GW of new plants operated with hydrogen from the get-go, with another tender for up to 15GW of gas-fired plants to be transitioned to hydrogen by 2035.

Read more: Germany explores EU-backed subsidy scheme for hydrogen power plants

The original plans were interrupted by a constitutional court ruling that declared the government’s reallocation of €60bn ($64.49bn) in unused debt to a climate fund – originally intended for COVID-19 relief – as unconstitutional.

Scholz, Habeck and Lindner also agreed that obstacles ahead of electrolyser construction and operation should be “dismantled” to accelerate the build out of Germany’s hydrogen production capacity.

They said there must be no double tax and fee burdens on electricity storage and electrolysers to incentive the production of hydrogen.

“The use of excess electricity is permitted without restrictions; All existing regulatory hurdles will be reduced as much as possible,” the BMWK said.

The agreement comes after the German Government earmarked €350m from its national budget to support renewable hydrogen production under the European Hydrogen Bank’s new Auction-as-a-Service (AaaS) scheme.

Read more: Germany earmarks €350m for EU-style renewable hydrogen auction

The scheme will follow a similar structure to the recently launched European Hydrogen Bank auctions, which offer up a fixed premium per kg of hydrogen for domestic renewable hydrogen producers.

Becoming the first EU member state to participate in the scheme, it will allow Germany to finance additional projects that are not selected by the Innovation Fund-backed European Hydrogen Bank auction.


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