Germany to tender 10 GW gas-fired capacity, plans capacity market by 2028

Germany is to tender support for 10 GW of gas-fired power plant capacity and plans a capacity market from 2028, the energy ministry said Feb. 5.

The new strategy, agreed after months of debate, waters down the coalition's consultation document last summer that planned to tender 15 GW of gas-fired capacity as well as 8.8 GW of hydrogen-fired capacity to allow an exit from coal in 2030 rather than 2038, a key goal of the coalition agreement in 2021.

In detail, four tenders for 2.5 GW hydrogen-ready gas plant are planned in the short term.

A spokesperson for the ministry told S&P Global Commodity Insights Jan. 23 that it was aiming for a first tender this year.

The new plant will have to convert to hydrogen between 2035 and 2040, with the exact date to be determined in 2032, the ministry added.

The plants have to be located at power-grid supportive sites and support will be financed from the KTF climate and transition fund that had some Eur60 billion frozen by a court ruling in November 2023 requiring the review of the power plant strategy, it said.

In addition, coalition leaders also agreed a concept for a new capacity market from 2028 with a final political agreement this summer.

The tendered capacity will be integrated into the new capacity market concept, it said.

Missing market signals

Some 10 GW of German coal capacity is set to close this year after emergency regulation during the 2022 gas supply crisis allowed reserve units to return to the market or cancelled closure dates for units awarded closure compensation in tenders.

This would still leave over 50 GW of capacity from gas, coal and lignite but with further closures planned over coming years and currently no market support or framework for new dispatchable generation capacity to back-up Berlin's plans for 360 GW of wind and solar by 2030.

Analysts at S&P Global Commodity Insights only expect some 6.6 GW average coal and lignite generation in 2028, according to a report dated Nov. 2023.

German clean spark spreads for 2025 were pegged Feb. 2 at minus Eur9.60/MWh (50% efficient gas), while the clean dark spread (45% efficient coal) was pegged at minus Eur6.18/MWh, according to Platts assessments for S&P Global Commodity Insights.