German Plans for Gas Power Face New Hurdles Over Renewables
(Bloomberg) -- Germany’s plan to build a fleet of gas-fired power plants is coming under pressure from Chancellor Friedrich Merz’s junior coalition partner over concerns that a push for renewable energy may be set back, according to people familiar with the discussions.
The center-left Social Democrats, who govern with Merz, aim to block a draft law being prepared by the Economy Ministry, the people said on condition of anonymity as talks take place behind closed doors. The SPD-led Environment Ministry will withhold approval unless the legislation secures carve-outs for renewables elsewhere, they said.
The tension could further delay legislation in the works for three years, which is aimed at securing Germany’s electricity supply with gas-fired plants when output from wind and solar sources run low. Passage of the package is crucial for kicking off auctions later this year to subsidize the plants.
Germany, which took its last nuclear plants offline almost three years ago and plans to phase out coal, will benefit from the flexibility of gas-fueled power supply. But Economy Minister Katherina Reiche, a Christian Democratic ally of Merz, has confronted criticism for favoring gas plants over other technologies, such as batteries or flexible demand solutions.
Critics have accused Reiche of being too cozy with industry. The minister sought feedback from utility EnBW Baden-Württemberg AG and leaned heavily on the company’s arguments in favor of gas plants over batteries, according to Der Spiegel magazine. The move skirted rules requiring such exchanges to be logged in a lobby register, it said.
The ministry said collecting input from stakeholders is standard practice in preparing legislation, according to a spokesperson.
The carve-outs requested by the Environment Ministry concern a different piece of legislation aimed at addressing backlogs in the power grid. According to a draft seen by Bloomberg, solar and wind farms in areas with grid congestions should no longer receive compensation during times of power curtailment, a move that would weaken returns but reduce burdens for taxpayers.
Environment Minister Carsten Schneider already said last month that such a plan has “no consensus in the government.” But Reiche again defended her proposal to cut back renewable subsidies in an essay in Frankfurter Allgemeine Zeitung newspaper last week.
An Economy Ministry spokesperson said the legislation will be introduced “shortly.” The Environment Ministry referred questions to the Finance Ministry, which declined to comment.
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