Press release , Oct 24, 2024

Power Plant Safety Act: High Hurdles for a Successful Auction

With the end of the consultation period for a Power Plant Safety Act (KWSG), Zukunft Gas, the industry association for the gas and hydrogen sector, still sees many unanswered questions. With this law, the German government wants to incentivise the construction and conversion of a total of 12.5 gigawatts of power plant capacity by 2030. Dr Timm Kehler, Chairman of Zukunft Gas, fears that the framework conditions presented in the consultation for the auctioning of the required power plant capacity pose too high a hurdle for potential bidders, as the association explains in its statement submitted yesterday:

"We welcome the Federal Government's consultation process on the Power Plant Safety Act. Only through such constructive cooperation between politics and industry will the transformation of the energy supply be successful and secure. However, the German government's proposals for the auction of power plant capacities, in particular hydrogen-ready gas-fired power plants, are still too restrictive to make the tender attractive to a large number of bidders.

The planned security deposits are far too high and will deter power plant operators from making the necessary investments. The technical risk for purely hydrogen-fuelled power plants also lies too much with the operators. The planned penalties and transitional provisions in the event of delayed realisation and when switching from methane to hydrogen are too strict, especially as many factors, such as the connection to the hydrogen core network, the availability of efficient hydrogen storage facilities or the supply of hydrogen, are not in the hands of the power plant operators.

We are also calling for an open-technology approach that also allows biomethane and hydrogen derivatives to be subsidised, particularly during the eight-year transition phase. In addition, there are further points that are set out in our statement. Overall, the individual requirements for potential investors are piling up to form major hurdles that are causing many players to question whether they will submit a bid at all. We hope that these points will be resolved in the further process and that we will be able to quickly secure the expansion of fluctuating renewables through controllable, flexible gas-fired power plants and replace coal-fired power plants as soon as possible."

About DIE GAS- UND WASSERSTOFFWIRTSCHAFT

As the voice of the gas and hydrogen industry, the association DIE GAS- UND WASSERSTOFFWIRTSCHAFT e.V. pools the interests of its members and is committed to utilising the potential of hydrogen and its derivatives as well as biogas and natural gas, including the associated infrastructure. The industry association also provides information on the opportunities offered by gaseous energy sources and their infrastructure in a climate-neutral and resilient energy system and drives the industry's transition to new gases. It is supported by leading companies in the energy industry and covers the entire value chain from production, transport and distribution to trading, sales and applications. Other industry associations and industrial companies support DIE GAS- UND WASSERSTOFFWIRTSCHAFT e.V. as partners.

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