Merz Says EU Has Signed Off on German Plan for New Gas Plants
(Bloomberg) -- Germany has received the long-awaited green light from the European Union to move ahead with a plan to subsidize a fleet of new gas-fired power plants.
Chancellor Friedrich Merz said the news from the European Commission — the EU’s executive arm — reached his government “this morning in Berlin,” adding that a €12 billion ($14 billion) package to reduce power prices for the nation’s struggling industry can also go ahead.
The plan required EU approval because it involves large government subsidies, he said at an event in Halle in Saxony-Anhalt.
Merz’s government aims to solicit bids to build 8 gigawatts of new gas-fired power plants this year with the goal of having them online by 2031. Another 4 gigawatts of capacity are foreseen for lower-carbon energy sources or gas plants that can switch to hydrogen more quickly.
The nation — which switched off its last nuclear power plants nearly three years ago and aims to phase out coal — needs flexible power sources, such as gas-fired plants, for times when wind and sun aren’t available.
Merz said on industry power price cuts that “the European Commission will also approve the combination of several options.” Companies will be able to draw support from two instruments — a €7.5 billion relief measure for small and mid-sized enterprises, as well as an existing €4.5 billion program for reimbursing the costs of carbon allowances, which will be extended to a greater pool of businesses.
That will help large energy-intensive companies such as steel producers, which were set to be excluded from the former subsidy as they already receive the latter. The European Union has a policy of restricting excessive subsidies from member states to avoid competition distortions and to create a level playing field within the bloc.
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