RWE, eastern German lignite company LEAG and Stadtwerke Karlsruhe are among the winners of Germany’s first tender for new power plants intended to support the country’s electricity supply. The Federal Network Agency awarded 11 contracts for a combined capacity of about 5,160 megawatts, the regulator said Tuesday. Ten awards went to RWE and LEAG, including its subsidiary Gaskraftwerk Leipheim; Stadtwerke Karlsruhe also received a contract.
The plants are scheduled to provide backup power from November 2031, when wind and solar generation is insufficient. Operators will receive payments for making capacity available over 15 years. At the average awarded rate, the payments amount to roughly €800 million per year, or about €12 billion over the contract period. The net cost could be lower because operators must surrender part of their revenues when electricity prices are very high. Funding is expected to come through a levy paid by electricity customers.
The tender attracted 41 bids totaling nearly 12,000 megawatts, well above the 4,500 megawatts initially sought. Seven bids were excluded for formal deficiencies. Capacity awarded exceeded the original target under a legal provision allowing the bid that first takes the total beyond the tendered amount to be included.
The average award value was €155,296 per megawatt of eligible capacity per year, below the maximum of €244,000. Federal Network Agency president Klaus Müller said competition had lowered support costs and described the results as an important first step toward securing the electricity supply over the long term. He also said the regional distribution would support reliable grid operation.
Economy Minister Katherina Reiche called the tender a success, saying it would support renewable energy expansion and the coal phase-out. Her ministry said all successful bids were for gas-fired power plants; battery storage did not win contracts. The tender’s requirements favored gas plants over many batteries: facilities must be able to provide 80% of their installed capacity for at least ten consecutive hours. New gas plants must also be capable of later conversion to hydrogen and operate climate-neutrally from 2046.
The largest share of awarded capacity is in North Rhine-Westphalia, at about 2,118 megawatts, followed by Brandenburg with 1,819 and Saxony with 910. Further awards went to Bavaria and Baden-Württemberg. The law gives preference to sites in the so-called grid-technical south, which includes North Rhine-Westphalia.
The Greens criticized the outcome. Politician Michael Kellner said it gave RWE and LEAG, which he described as former coal companies, substantial market power, and argued that the tender design had been poor.
A second tender for 4,500 megawatts is due to be announced on November 10. Another 2,000 megawatts are planned for May 2027, without the strict ten-hour requirement. The European Commission approved the support scheme in September and estimated its total cost through 2045 at between €15.6 billion and €35.2 billion; electricity customers are ultimately expected to fund it through a levy.
Sources: FAZ.