Under Berlin’s power plant strategy, 12GW of new dispatchable capacity will be tendered in 2026, with 10GW required to operate continuously over extended periods to ensure security of supply.

The plants are expected to enter service by 2031, with additional tenders planned for 2027 and 2029/2030.

However, all plants built under the scheme will have to be “hydrogen capable” and “fully-decarbonised” by 2045 at the latest.

The German Federal Ministry for Economic Affairs and Energy (BMWI) said “additional measures” will incentivise an early switch to hydrogen. It hopes to have 2GW of capacity running on hydrogen by 2040 and another 20GW by 2043.

Developers have been warning that without a clear timeline for hydrogen-ready power plants, green hydrogen projects could be shelved.

While the newly agreed strategy could make it easier for projects to line up offtake, progress in building production capacity has remained slow, with Germany’s early-stage project pipeline thinning.

To support these early switches, BMWI said additional tenders would include contracts for difference to cover additional fuel costs associated with hydrogen.

“We are setting the starting point for a comprehensive, technology-neutral capacity market, which will incentivise the construction of further power plants and other flexible capacities,” said German economy minister Katherina Reiche.

The minister claimed the strategy would ensure both security of supply and compliance with the nation’s climate targets.

Funds for the tenders have been confirmed, with the strategy still requiring final approval by the EU after the German government submits draft legislation.

It comes as a key step forward in Germany’s efforts to ensure its electric supply as it phases out coal-fired capacity. However, the process has faced significant delays.

EU-level negotiations and the collapse of the former government set back the process dramatically.

The former administration has secured European Commission approval for 12.5GW of power plants, but no auctions were started before the government collapsed in November 2024.

It had looked unlikely that the EU would approve the Merz-led government’s 20GW plant due to strict state aid rules.