Power Plant Safety Act: Restrictive regulations stand in the way of hydrogen-capable gas-fired power plants

The Federal Ministry of Economics has initiated the legislative process for a Power Plant Safety Act (KWSG). It has also launched a further, very short (three-day) consultation process for the industry associations. At the end of this process, Dr Timm Kehler, Chairman of Zukunft Gas, the industry association of the gas and hydrogen sector, expressed his hope that the law will be passed quickly despite the unclear majority situation in the German Bundestag. With the law, the German government wants to incentivise the construction and conversion of a total of 12.5 gigawatts of power plant capacity by 2030:

‘The Power Plant Safety Act provides important impetus. However, many of the regulations in the amended draft are still too restrictive to incentivise the construction of new hydrogen-capable power plants and the conversion of existing gas-fired power plants to hydrogen. For example, the planned security deposits are still too high and will deter power plant operators from making the necessary investments. The requirements for participation in the bidding process are also too restrictive to encourage a rapid expansion and conversion of the power plant fleet.

We therefore believe that further amendments to the law are urgently needed in order to secure supply in the future. It must also be ensured that the KWSG is embedded in a future capacity market.

In view of the forthcoming new elections and the fact that a budget has yet to be passed, we believe it is urgently necessary for the Bundestag to pass the KWSG quickly and for the upcoming auction procedures to be associated with minimal bureaucracy for power plant operators. However, we cannot assume that the current government will finalise this project. It should therefore be a priority in the first hundred days of the new government to organise the issue of the power plant fleet of the future. After all, this is a prerequisite for replacing coal-fired power plants soon and securing the expansion of fluctuating renewables with controllable, flexible gas-fired power plants.’