Priya PatelTLDR: Germany plans to offer only €7.55 billion ($8.28 billion) in subsidies from its state coffers to finance the construction of hydrogen-ready gas power plants, according to leaked documents seen by Bloomberg. This amount represents just around 12.5% of the estimated cost of building enough gas power plants to replace coal, which is €60 billion. The leaked documents also indicate that the first auction for these hydrogen-ready gas power plants will be delayed by two years, pushing it back to 2028. In November, Germany faced a setback to its hydrogen plans when the country’s constitutional court ruled against transferring €60 billion from unused post-Covid recovery budgets to the Climate and Transformation Fund. This article explores the implications of the limited state financing and the potential impact on Germany’s hydrogen industry.
Key Points:
– Germany plans to provide only €7.55 billion in subsidies from its state coffers for hydrogen-ready gas power plants.
– The subsidies will cover just 12.5% of the estimated €60 billion cost to build enough gas power plants to replace coal.
– The first auction for hydrogen-ready gas power plants will be delayed by two years.
– Germany faced a setback to its hydrogen plans when its constitutional court ruled against transferring €60 billion from unused post-Covid recovery budgets to the Climate and Transformation Fund.
Germany’s decision to offer limited financing for hydrogen-ready gas power plants raises concerns about the country’s ability to achieve its ambitious hydrogen targets. The government had previously announced auctions for up to 23.8GW of hydrogen-fired power plants, with the aim of replacing coal. However, the leaked documents indicate that the state will only provide a fraction of the required funding, leaving the industry to cover the rest.
This limited state financing may hinder the development of a robust hydrogen industry in Germany. The high cost of building gas power plants and converting them to run on hydrogen poses a significant financial challenge. Without sufficient state support, it may be difficult for companies to invest in this infrastructure and realize the potential of hydrogen as a clean energy source.
The delay in the first auction for hydrogen-ready gas power plants also raises questions about Germany’s ability to meet its hydrogen targets in a timely manner. The original plan was to hold a 10GW tender in 2026, but the leaked documents suggest that it will now be pushed back to 2028. This delay could slow down the deployment of hydrogen infrastructure and impede progress towards decarbonization goals.
Germany’s setback in funding its hydrogen plans aligns with previous difficulties in securing sufficient financial support for renewable energy projects. The court ruling against transferring €60 billion to the Climate and Transformation Fund has created additional challenges for Germany’s green energy transition. The government has already made cuts to climate spending and is raising the carbon price on heating and transport fuels to generate extra revenue.
Overall, the limited state financing for hydrogen-ready gas power plants and the delay in the auction process pose significant challenges to Germany’s hydrogen industry. The country will need to find alternative sources of funding and accelerate its hydrogen deployment efforts to achieve its clean energy ambitions.
