New backup gas plants: what Berlin electricity customers should know

Germany’s Federal Network Agency has picked the first new gas-fired power stations to back up wind and solar power, and almost all the contracts went to the energy companies RWE and Leag. For people in Berlin, the main points are that one of the largest sites is in neighbouring Brandenburg and that electricity customers across the country, including Berlin households, will pay for the plants through a new charge on their bills.

What happened

According to Tagesspiegel, which published a report from the dpa news agency, the Bundesnetzagentur (Federal Network Agency, the regulator for electricity, gas and telecoms networks) has announced the results of its first tender round for new gas power stations. These plants are meant to supply electricity during a Dunkelflaute, the German term for periods when it is dark and there is little wind, so solar panels and wind turbines produce very little.

The agency received 41 bids and accepted 11. The winning bidders were RWE, Leag, Gaskraftwerk Leipheim (a Leag subsidiary) and the Stadtwerke Karlsruhe, the municipal utility of Karlsruhe, which is mostly owned by local government. According to dpa, bids for battery storage were also submitted but were too expensive to win.

The successful projects are spread across five federal states:

• Brandenburg: 4 contracts for the Leag site at Jänschwalde
• North Rhine-Westphalia: 3 contracts for the RWE sites at Voerde, Weisweiler and Werne
• Saxony: 2 contracts for the Leag site at Boxberg
• Bavaria: 1 contract for the Leag site at Leipheim
• Baden-Württemberg: 1 contract for the site in Karlsruhe

Together, the 11 projects have a capacity of 5,160 megawatts. Most will be built on current or former coal power station sites, and they must be running by 2031 at the latest. They will burn natural gas at first and are supposed to switch to hydrogen produced in a climate-friendly way by 2045 at the latest. The plants are part of Germany’s plan to phase out coal power step by step by 2038.

Operators will be paid for 15 years for keeping this capacity available, even if the plants only run for a few hours a year. Tagesspiegel reports an average payment of around 155,300 euros per megawatt hour, which adds up to annual costs of just over 800 million euros for these 11 projects.

Federal Economics Minister Katherina Reiche (CDU) called the round a great success. Speaking in Berlin, she said the 41 bids for almost twelve gigawatts showed how much willingness to invest the right conditions can mobilise. She said the average winning price was well below the maximum price of 244,000 euros, which she said matters for electricity customers because it lowers the cost of securing supply.

RWE said it plans to start building its first plant within a few weeks. Leag said it will build the new units at Jänschwalde and Boxberg using existing power station infrastructure and adapt them for hydrogen later.

What it means for you

The cost of the plants will be covered by a new Umlage, a levy added to electricity prices and paid by all electricity consumers. If you live in Berlin and pay an electricity bill, this levy will apply to you. Tagesspiegel reports that the amount it will add to prices has not yet been set, because more tender rounds are still to come. Nothing changes on your bill yet, and you do not need to do anything now.

When the levy is introduced, it is worth checking your supplier’s notices about price changes. In Germany, suppliers must tell you in advance when your prices go up.

The closest of the new sites to Berlin is Jänschwalde in Brandenburg, where Leag won four contracts. The source does not say whether the new plants will change local electricity supply or prices in Berlin itself.

What to watch next

The Bundesnetzagentur is preparing a second tender round, and two more are planned in total. According to dpa, bids for the next round must be submitted by 29 December. Agency president Klaus Müller said the regional spread of the contracts will help keep the grid running safely. Once the later rounds are finished, the size of the new levy should become clearer.

The results have also drawn criticism. The Deutsche Umwelthilfe (DUH), an environmental and consumer organisation, said the government is making electricity customers pay for new fossil fuel plants and calling it supply security. Its federal managing director, Sascha Müller-Kraenner, said battery storage had come away with nothing while large fossil fuel companies were being subsidised. He said the outcome showed there had been no fair competition between technologies or companies. Expect this debate to continue as the next rounds go ahead.

Source: Tagesspiegel