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Germany announces €16 billion plan to subsidise first 10GW of hydrogen-ready power plants

06 February 2024

The German government announced on 5 February that it will be subsidising gas power plants that are capable of switching to hydrogen with a reported €16 billion (£13.7bn). The Federal Ministry for Economic Affairs and Climate Action of Germany (BMWK) made the announcement as part of its effort to supplement intermittent renewables such as wind and solar, as well as to accelerate the country’s decarbonisation plans.

Representative image: Shutterstock
Representative image: Shutterstock

While a timescale hasn’t been announced, the BMWK said that Federal Chancellor Olaf Scholz, Economics Minister Robert Habeck and Finance Minister Christian Lindner had agreed on the essential elements of a power plant strategy as well as specifications for further projects. It added that the tender process for four gas plants with a combined capacity of 10GW would begin soon.

The government is supporting companies with €16 billion (£13.7bn) to build and operate the hydrogen power plants, Reuters news agency reports, including capital and operating subsidies. Plans to transition towards hydrogen should be drawn up by 2032 so that the plants can switch completely some time between 2035 and 2024, the BMWK said. The ministry has also said that power plants that run exclusively on hydrogen and with a capacity of up to 500MW would be subsidised as part of energy research.

In the same announcement, BMWK said it had been agreed that any existing obstacles to the construction and operation of electrolyzers should be dismantled without restrictions and that all possibilities should be used, in particular to accelerate the construction of electrolyzers that are to be operated in a way that benefits the country’s energy system. In addition, it said there must be no double burden of taxes and fees on electricity for storage and electrolysis, so that there are market and system-serving incentives to produce hydrogen. 

The agreement reached on the power plant strategy will now be discussed with the EU Commission in Brussels and then consulted with the public.

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