Planned new power source for reserve energy facilities
Germany to Introduce Capacity Mechanism for New Gas-Fired Backup Plants
The Federal Government of Germany has proposed a new capacity mechanism to finance reserve power plants, primarily new gas-fired power plants, as part of the country's efforts to secure electricity supply during the coal phase-out.
The plan involves installing up to 20 gigawatts of new gas-fired power plant capacity as backup for renewable energy sources. The first auctions for these capacity mechanisms are planned for the end of 2025.
While the exact cost figure for the capacity mechanism has not been disclosed, it is designed to remunerate these reserve resources to ensure security of supply. This aligns with the European Union's regulatory framework for capacity mechanisms, which emphasizes competitive, targeted, and minimally market-distorting designs.
The Federal Network Agency (BNetzA) has emphasized the need for a swift legal framework to enable the quick construction of these new backup plants. They also suggest equipping these plants with technologies like phase shifters for grid stability, highlighting that the financing under the capacity mechanism would support plants that contribute not just power but also system reliability.
Criticism of the new levy for the reserve power plants has come from Michael Kellner, a Green politician. He has expressed concerns about the costs, stating that both consumers and industry will bear a share of the costs. The plans for the capacity mechanism were previously considered by Robert Habeck, Katherina Reiche's predecessor.
The reserve power plants are intended to operate when needed, particularly during dark doldrums or price peaks on the electricity market. They will step in when electricity generation from renewable energies is insufficient. The first tenders for these reserve power plants are expected to start this year.
Sources: Clean Energy Wire, Emissions-EUETS.com, Rabobank, POLITICO.
- The capacity mechanism in Germany's plan utilizes finance from the industry to fund new gas-fired backup plants, which are crucial for securing the country's energy supply during the coal phase-out.
- These new backup plants, equipped with energy-efficient technologies, are not just for supplying power but also improving grid stability, contributing to the country's industrial and energy sectors.
