The German government has agreed to a EUR16bn (USD17bn) plan to subsidize gas power plants that can switch to hydrogen, as reported by Reuters on February 5. According to people familiar with the matter, the government would spend around USD17bn to support companies in constructing and operating hydrogen-ready gas power plants, including capital and operating subsidies. The developers are required to upgrade plants to burn hydrogen sometime between 2035 and 2040, while leaving open room for carbon capturing and storage technologies. The exact timeline for these gas plants to switch to hydrogen will be decided by the government in 2032, without specifying that the this must be green hydrogen produced from renewable sources.

The subsidy plan still needs approval from the European Commission, which previously raised expressed concerns about an expansion of fossil fuels. However, the expansion of gas-fired power plants seems a necessary choice to Germany, especially as the country looks to bring forward its coal phase-out plan by eight years to 2030 amid a growing power demand. In addition, the country’s shuttering of its remaining nuclear reactors last year also makes gas power plants crucial. Aside from the financial support for hydrogen-ready gas power plants, the government has also proposed measures to simplify the fiscal and planning processes for green hydrogen facilities, aiming to secure a local supply for power producers. However, critics including domestic environmental groups argue that the gas plan may prolong the country’s reliance on fossil natural gas, impeding the efforts to achieve climate neutrality.

S****ources:

https://www.reuters.com/business/energy/germany-agrees-subsidy-plans-hydrogen-ready-gas-power-plants-2024-02-05/

https://www.bloomberg.com/news/articles/2024-02-05/germany-paves-way-for-major-expansion-of-gas-fired-power-plants

https://www.power-technology.com/news/germany-e16bn-hydrogen-power-plants/?cf-view