Leag emerged as the leading winner in Germany’s first tender for new power plants designed to secure electricity supplies when wind and solar generation is low. The Federal Network Agency awarded the Cottbus-based company seven of the 11 contracts announced on Tuesday, including six projects in Lusatia and one in Leipheim, Bavaria.

In Lusatia, Leag plans to convert parts of its existing lignite power stations in Jänschwalde and Boxberg for gas-fired generation. The company expects to invest up to €2 billion in facilities with nearly three gigawatts of eligible capacity. Leag chief executive Adi Roesch called the result a major success, saying the projects would reuse existing grid connections, buildings and technical equipment to save time and money.

The new plants are intended to provide backup when renewable generation is insufficient, so they are expected to operate only intermittently. They will initially use natural gas and are to be converted to hydrogen by 2045. Under the scheme, operators will be paid for making capacity available over a 15-year period. Economy Minister Katherina Reiche said the new capacity should be ready by 2031 at the latest.

RWE was another major winner, receiving awards for three new hydrogen-capable gas plants in Voerde, Weisweiler and Werne. Their eligible capacities are 730 megawatts in Voerde and 700 megawatts at each of the other two sites. The company said it expected to begin construction of its first plant, probably in Weisweiler, within weeks. Stadtwerke Karlsruhe also won a contract for a smaller, 54-megawatt gas-engine plant.

The tender attracted 41 bids for almost 12 gigawatts of capacity, close to three times the 5.16 gigawatts ultimately awarded. Average award prices were €155,296 per megawatt of eligible capacity per year, below the maximum of €244,000. No battery-storage bids were successful. The German Association of Local Utilities and The Greens criticised the concentration of awards among a small number of providers.

The awards were also unevenly distributed geographically. According to grid operator Amprion, 53% of successful projects are in the technical north of the grid, in Brandenburg and Saxony, while 47% are in the south, including North Rhine-Westphalia, Bavaria and Baden-Württemberg. Amprion said the tender’s southern bonus had not produced a sufficiently effective north-south distribution of secured capacity.

Leag’s plan to adapt coal units has prompted scrutiny over their performance. The converted plants are expected to have an efficiency of 40% to 45%, compared with up to 60% for modern combined-cycle gas turbines. That means they would use more gas and emit more carbon dioxide for each unit of electricity produced. An estimate from Hendrik Diers of the University of Cologne’s Institute of Energy Economics puts annual emissions from Leag’s converted plants at about 1.5 million tonnes if they run for roughly 1,000 hours. New combined-cycle plants with the same capacity and operating time would emit about 1.1 million tonnes, although converting existing facilities could save costs and avoid emissions associated with demolition and new construction.

The adapted units would also be slower to ramp up and down than modern combined-cycle plants. Diers said this inflexibility could raise average wholesale electricity prices by a few euros per megawatt-hour, as such plants may be less able to compensate for forecasting errors in renewable generation. He noted that start-up times matter less in the day-ahead market, where weather forecasts generally indicate several days in advance when plants will be needed.

EnBW, TotalEnergies and Uniper received no awards in the first round and may seek opportunities in later tenders. Uniper declined to comment on whether it might challenge the result in court. Industry discussions before the tender had raised legal questions about converting old coal plants, including whether a facility could receive compensation for being shut down under the coal phase-out and later receive fresh support when parts of it return to the electricity market.

The Federal Network Agency did not provide an estimate of the additional costs for electricity consumers. The article reports that the €12 billion in total support, along with costs from future tenders, will appear on electricity bills through a levy.

Sources: FAZ.