Germany has awarded contracts worth approximately €12 billion over 15 years for 11 gas fired power projects with a combined tender capacity of 5.16 GW.
The Federal Network Agency selected the projects to strengthen electricity supply security as the country expands renewable generation and phases out coal. The costs are expected to be passed on to consumers through an electricity levy.
LEAG secured seven contracts for projects in Brandenburg, Saxony, and Bavaria, while RWE won three projects in Voerde, Werne, and Weisweiler. Stadtwerke Karlsruhe received the remaining award for a 54 MW plant. RWE’s projects account for approximately 2.1 GW of capacity, while the successful projects are expected to become available from November 2031.
The awards support Germany’s plan to develop 12 GW of new dispatchable power capacity through auctions in 2026. The plants are designed to operate initially on natural gas and transition to hydrogen as fuel supplies and infrastructure develop, supporting the country’s longer term goal of climate neutrality by 2045.
That transition depends on more than turbine specifications. Germany will need sufficient low carbon hydrogen production, storage and transport infrastructure, alongside commercially viable fuel contracts. If these develop more slowly than the generation fleet, the plants could continue burning natural gas for longer than anticipated.
Hydrogen fired power also carries a substantial efficiency penalty. After electrolysis, storage, transport, and electricity generation, typically only around 30% to 40% of the original electricity may be recovered, depending on system configuration. This makes hydrogen less efficient than batteries for short duration storage, although it may provide dispatchable power during longer periods of low renewable output.
Costs and alternatives remain under scrutiny
The 15 year contracts provide revenue certainty for plants that may operate intermittently, but they also shift part of the investment cost to electricity consumers. The central question is whether the capacity will deliver sufficient reliability benefits to justify that expense as alternatives such as batteries, grid expansion, and demand response develop.
Germany’s approach reflects a broader effort to maintain dispatchable generation while reducing emissions. Singapore and Oman have also pursued hydrogen ready power plants, while South Korea has introduced a separate clean hydrogen electricity auction with an annual procurement volume of 500 GWh.
The German awards move new capacity closer to construction, but their long term climate value will depend on how quickly low carbon hydrogen becomes available and whether the plants can transition away from natural gas without creating excessive costs for consumers.
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