Germany Needs New Natural Gas Capacity to Meet Its Coal Phase-Out Target

Germany needs to soon move to award tenders for new natural gas capacity that would replace coal plants if Europe’s biggest economy is to meet its target to phase out coal in power generation by the end of the decade, German energy giant Uniper says.

Earlier this year, Germany decided that it would tender 10 gigawatts (GW) of new natural gas-fired capacity from power plants that could be converted to hydrogen in the 2030s, as part of plans to ensure stable electricity supply as wind and solar power generation and installations grow.  

Germany, which last year closed all its remaining nuclear power plants – is now seeking to balance the generation and transmission systems with new gas power plants. But these plants need to be ready to be converted to hydrogen at some point between 2035 and 2040, the economy ministry has said.

The country has also decided to accelerate the coal phase-out to 2030, from an earlier planned date of 2038, but Europe’s largest economy reactivated some mothballed coal-fired power plants in the previous two winters after Russian natural gas supply to Germany ceased.

Uniper, which continues to run several coal-fired power plants in Germany, cannot shut these down right now because it needs gas-fired capacity to replace them and ensure system stability, the company’s CEO Michael Lewis told Bloomberg in an interview on the sidelines of the Gastech conference.

“We want to close coal as quickly as possible. We want to build new gas plants, and we want to build the lowest cost plants we can that can then be subsequently converted to hydrogen,” the executive said.

“The sooner we get the auction process next year, the sooner we can start building those plants,” Lewis told Bloomberg.

Uniper, which the German government had to bail out at the start of the energy crisis in Europe in 2022, has also pledged to invest more than $8.9 billion (8 billion euros) in green energy by 2030 as it looks to become a greener energy provider faster than previously planned.

By Tsvetana Paraskova for Oilprice.com

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