Brussels Approves First Tender for New Gas-Fired Power Plants in Germany

The European Commission has granted state aid approval for the first tender under Germany's Power Plant Security of Supply Act (Stromversorgungssicherheitsgesetz, StromVSG). This clears the final formal hurdle for Germany to put the construction of new gas-fired power plants out to tender. The Commission reviewed and approved the capacity mechanism, which will become available from 2031; its costs are estimated at between EUR 15.6 billion and EUR 35.2 billion.

Federal Network Agency launches first tender round

Germany's Federal Network Agency (Bundesnetzagentur, BNetzA) has already launched the first tender. Operators can submit bids until 8 September. The initial round covers 4,500 MW of de-rated capacity, with a price cap of EUR 244,000 per MW. Further tender rounds will follow on 29 December 2026 and 18 May 2027. In total, 11 GW is to be tendered, with all capacity required to be online by the end of 2031 at the latest. From 2032, the actual, comprehensive capacity market is set to take shape.

Hydrogen readiness as a key condition

The capacity mechanism is open to all technologies, with contracts awarded for terms of up to 15 years. All new gas-fired power plants applying for a capacity contract must be hydrogen-ready, so that they can be converted to run on hydrogen in future – a key building block for decarbonising the power plant fleet by 2045 at the latest.

Long-duration criterion sparks debate

The first auctions are reserved for additional long-duration capacity: plants must be able to supply at least 80 percent of their capacity for ten hours and then restore that capability within three hours. This requirement had drawn criticism in advance, as battery storage systems can barely meet it. The May 2027 tender for 2 GW will not include a long-duration criterion; the 2027 and 2029 rounds will be open not only to power plants and storage facilities but also to flexible demand-side resources and existing plants.