EU approves Germany’s €35 billion support package for gas plants

Germany can support the construction of new gas-fired power plants with a package worth up to €35 billion after receiving approval from the European Commission. The plants are intended to help prevent electricity supply gaps from 2031.

Germany had already decided to build numerous new gas plants over the next five years. The EU approval was the remaining requirement. Electricity users will pay for the program through a new levy starting in 2031, although the eventual increase in power prices remains unknown.

The Commission said the support was necessary for security of supply and matched the actual need. It also said the funding would be awarded through a fair, nondiscriminatory process, limiting the effect on competition within the EU.

The plan covers 11 gigawatts of capacity, with the plants due to be connected to the grid by the end of 2031 at the latest. Operators will compete for support in auctions. The facilities will initially burn natural gas, producing climate-damaging emissions, but must be designed to run on hydrogen and operate “climate-neutral” by 2045.

The plants are expected to step in when wind and solar power produce too little electricity. Germany plans to introduce a capacity market from 2032, paying operators to keep reserve capacity available even when it is not needed. At the same time, the country aims to obtain at least 80 percent of its electricity from renewable sources by 2030 and end coal-fired power generation by 2038. EU state-aid rules require the Commission to review such support so that financially stronger countries do not give domestic companies an unfair advantage.