Planned upgrade for backup power facilities' energy sources
The German government, under the leadership of the current Federal Minister of Economics, Katherina Reiche (CDU), is planning to introduce a new capacity mechanism to ensure the profitability of gas-fired power plants. This mechanism is designed to provide payment for the mere provision of reserve power, not generated electricity.
According to reports, Reiche announced that she will start the first tenders for reserve power plants this year, with a total capacity of up to 20 gigawatts by 2030. The traffic light government has assumed at least two cents per kilowatt hour in its planning for the central capacity mechanism.
However, the exact amount of the new levy to finance this mechanism has not yet been provided by the German government. Michael Kellner, a critic of this decision, has accused the government of concealing the exact amount of the new levy.
The costs of this new levy will be shared by all electricity customers, including consumers and companies. The levy is expected to be introduced when the reserve power plants start operating.
These reserve power plants will step in when electricity generation from renewable energies is not sufficient, during so-called dark doldrums or price peaks on the electricity market. They are intended to be used in particular during these critical moments to maintain grid stability.
The German government's capacity mechanism is also expected to be connected to the tenders of the revised power plant strategy, following discussions around Germany's capacity market and ensuring grid stability that have been ongoing, at least since the tenure of Robert Habeck, the previous Federal Minister of Economics and a member of the Greens party.
EU state aid law requires a "cause-related refinancing" in the event of a capacity market. This means that the funding for these reserve power plants must be directly linked to their function as a backup for renewable energy sources.
The planned capacity mechanism for gas-fired power plants is intended to ensure the profitability of these power plants, providing them with a steady income even when they are not generating electricity. This mechanism is part of the government's efforts to maintain a balanced and reliable energy supply in Germany.
Stay tuned for more updates as official details about this levy become available from government or regulatory announcements.
The planned capacity mechanism for gas-fired power plants, designed to maintain a balanced and reliable energy supply in Germany, will be financed through a new levy shared by all electricity customers, including consumers and companies. This levy is expected to be linked to the function of these plants as a backup for renewable energy sources, as required by EU state aid law, ensuring a cause-related refinancing.
