The German government has approved plans to subsidize gas power plants with the capability of converting to hydrogen, which will be produced using renewable energy. The goal of these subsidies is to support intermittent renewable energy and expedite the transition to low-carbon generation. The tender process for four gas plants with a total capacity of up to 10 gigawatts will be initiated soon, the Ministry did not specify when this would take place. The announcement came after industry pressure for details surrounding the government’s promised strategy. Germany plans to use hydrogen to facilitate its transition away from gas and coal.
The German government also aims to subsidize power plants running exclusively on hydrogen with a capacity of up to 500 megawatts for energy research purposes. The Ministry announced that by 2032, hydrogen transition plans should be put in place to enable these plants to fully switch to hydrogen between 2035 and 2040. Moreover, it is willing to discuss whether there is a need for additional gas capacity beyond the 10 gigawatts planned. It also announced plans for the introduction of a market-based capacity mechanism and a new electricity market design, with a view to have it agreed upon by the middle of this year and operational by 2028.
There are varying opinions on the German government’s initiatives to adopt hydrogen infrastructure. While the European Union promotes green hydrogen, which is produced through the electrolysis of water using electricity from renewable sources, Germany plans to use hydrogen from a variety of sources. Additionally, there are concerns that gas power plants being built today may not get converted to hydrogen in the future.
Germany aims to reduce its greenhouse gas emissions by 55% by 2030. By 2030, the country plans to obtain 80% of its energy from renewable sources. An estimated 75% of its primary energy consumption meanwhile came from fossil fuel sources, as of 2022, according to the U.S. Department of Commerce.
There are key projects planned that will be critical for Germany to reach its energy goals, including the planned plants which will be crucial for convincing eastern producers of brown coal to phase out their coal-fired stations. Moreover, Germany plans to import green hydrogen to meet around two-thirds of its consumption by 2050. It also aims to participate in a joint venture with Italy and Austria to build a pipeline that will transport low-cost renewable hydrogen produced in North Africa to Europe.