Germany overhauls gas-fired capacity addition plans
Germany has scaled back plans to add more hydrogen-ready gas-fired capacity towards the end of the decade, but is now likely to allow gas-fired power plants with carbon capture and storage (CCS).
German climate and economy ministry BMWK earlier this month announced that it would "shortly" tender for a combined 10GW of hydrogen-ready gas-fired capacity. The gas-fired power plants would have to switch fully to hydrogen between 2035 and 2040, BMWK said, with the final date determined in or after 2032. In a previous draft from August last year, the ministry had outlined plans for 15GW of hydrogen-ready gas-fired plants, in addition to 8.8GW of capacity that would run on hydrogen from the start. But plans for the hydrogen-only plants have been scrapped entirely.
Industry representatives have criticised the revised power plant strategy for not providing enough capacity for a quick energy transition. The timing is "very tight" to meet Germany's 2030 coal phase-out goal, German utility Uniper chief executive Michael Lewis said this week. Germany would need 20-25GW to even replace decommissioned power plants, Lewis said.
Germany has expanded its gas-fired capacity in recent years as coal and lignite plant shutdowns and the nuclear phase-out partly counteracted renewable capacity additions. The country's gas-fired capacity has risen by a net 5.67GW since 2019, while a net 16.79GW of coal, lignite, and nuclear capacity has been taken off the grid, data from Fraunhofer ISE show (see graph). Over the same period, wind and solar additions reached 47.72GW, although renewable assets run at a lower load factor than thermal plants as external weather patterns determine their output.
Germany is placing a strong focus on renewable hydrogen in the energy transition and is eyeing imports as well as domestic production, especially in the northern part of the country, which has ample renewable power potential. Renewable hydrogen, produced through electrolysis in times of surplus generation, can be burned in hydrogen-fired power plants to meet base-load and peak demand.
CCS at gas-fired power plants
In its draft carbon management strategy published earlier this week, BMWK signalled it will allow CCS not only in industrial processes but also in gas-fired power plants, a departure from previous policy.
Allowing CCS at gas-fired power plants may open an option for low-carbon dispatchable electricity generation. Germany's energy policy had previously mostly focused on renewables with hydrogen or battery storage, rather than banking on firm low-carbon generation options such as gas-fired generation with CCS or nuclear generation. CCS had been effectively banned in Germany until now, with no legal provisions for CO2 transport and local veto rights for carbon storage sites. And while BMWK last year said it was in "intensive" talks with Norway and Denmark on cross-border CO2 transport and storage, storing carbon in Germany's offshore economic zone was "meeting Germany's responsibilities rather than shifting it onto others", BMWK said. Economy and climate protection minister Robert Habeck called the decisions "pragmatic" and "responsible" as without CCS, Germany's climate targets will be "impossible to reach".
But environmentalists have slammed the policy shift. The move could "destroy acceptance for any kind of CCS in Germany" and was carried out "evidently at the instigation" of the pro-business FDP coalition party, which tends to favour technological openness, according to environmental group Germanwatch.
Advocates of CCS point to its potentially inevitable use in hard-to-abate industrial sectors such as the cement industry. But BMWK's draft strategy points out that even the most advanced CCS technology is only able to filter 90-95pc of end-of-pipe carbon emissions, making fossil fuel-based CCS a bridging technology towards a zero-carbon power system.
While the government will allow CCS in gas-fired power plants, it will provide no financial support for this, and it will not allow coal-fired power plant to access the CO2 grid. The government's strategy makes no mention of low-carbon hydrogen made from natural gas with CCS.
Energy-intensive industry association VIK welcomed the government's commitment to "technological openness", highlighting that the market should decide if this technology should be used, which is "in no way certain". The role of CCS in gas-fired power plants will "depend on costs, infrastructure and flexibility of the installations", energy and water association BDEW said.
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