Bavaria's Prime Minister Markus Söder (CSU) and his Baden-Württemberg counterpart Cem Özdemir (Greens) have now also joined the discussion about the locations and technology of the new backup power plants. They are calling for the tender conditions for new power plant capacities to be fundamentally improved. It is crucial that new gas power plants are built where they are particularly needed for security of supply and network stability, it said in a joint statement.
This applies particularly to the south of Germany with the federal states of Bavaria and Baden-Württemberg. “The previous results of the first round of tenders for long-term capacities are inadequate and show a clear need for correction on the part of the federal government,” it said.
"If you want security of supply and economic growth, you have to build new gas power plants where they are needed. And that is especially in the south of Germany," said Özdemir. Söder called it “particularly fatal” that instead of new gas power plants in Bavaria and Baden-Württemberg, the conversion of depreciated and no longer needed brown coal blocks in the north should now be promoted.
The new gas power plants are intended to ensure security of electricity supply by 2031 at the latest as part of the coal phase-out planned for 2038. As backups, they are intended to produce electricity, especially during periods of darkness - when wind and solar power plants deliver little. The operators receive money for maintaining the power plants. Whoever offers this at the cheapest price will be awarded the contract in tenders.
Almost all of the contracts in the first round went to the energy companies RWE and Leag. They want to build new power plants at existing or former coal-fired power plant sites. Six Leag projects in Brandenburg and Saxony are “fuel switch” projects in which lignite-fired power plants are to be converted into gas-fired power plants. Eastern Germany is part of the north in terms of network technology. Another round of bidding began on Tuesday.
Meanwhile, there is also discontent in the energy industry about the results of the first round of tenders. The electricity producer Uniper had the consulting firm Enervis carry out a short study to calculate how high the electricity generation costs are when using converted coal-fired power plants compared to new gas and steam turbine power plants.
Fuel switch projects could have submitted lower bids due to lower investment costs, the study says. “However, their lower efficiency leads to higher variable generation costs and can therefore increase wholesale electricity prices,” writes study author Tim Höfer. Modeling shows that the additional electricity procurement costs exceeded the assumed savings in capacity compensation.
A Uniper spokesman said: “Converting existing, old systems can be cheaper in terms of funding, but new efficient power plants are significantly more economical to operate and ultimately deliver electricity at lower prices.” Further auctions would therefore have to pay closer attention to the overall costs and focus on the construction of additional, new power plants.
The Federal Ministry of Economics has now also responded to the discussions about the surcharges for converted lignite-fired power plants in the first round. It now wants to specify the rules according to which electricity companies can take part in the tenders. A regulation is now intended to make it clear, among other things, that bids can only be submitted for coal-fired power plants to be converted that have already been shut down or must be shut down by January 1, 2030 at the latest. There should be no incentive to bring forward the closure of coal-fired power plants.
The ministry explained that the “specifications” would not affect the awards in the first round of tenders. The ministry further stated that the results of the first bidding date were a “great success”.
