Bundesnetzagentur awards 11 gas power plant contracts, mostly to RWE and LEAG

First tender awards

The Bundesnetzagentur announced on Tuesday, 3 November, eleven contracts from its first tender for new gas-fired power plants meant to cover periods of weak wind and sun. The awards add up to about 5,160 megawatts, or 5.16 gigawatts. The tender had originally covered 4,500 megawatts, and 41 bids totalling nearly 12,000 megawatts came in, although seven were excluded for formal defects. More capacity was awarded than planned because a legal rule also counts the bid that first pushes the volume past the tendered amount. The plants will burn natural gas at first and must run on climate-neutral hydrogen by 2045 at the latest.

Economy Minister Katherina Reiche (CDU) called the first round a success and linked it to the cost of securing supply.

“We are moving the power plant strategy from planning into implementation and so creating the basis for a secure and affordable power supply.”

Bundesnetzagentur president Klaus Müller said the regional spread of the awards also supports safe grid operation.

“The results of the tender are an important first step toward safeguarding the power supply in a long-term and cost-efficient way.”

Where the plants will stand

LEAG receives seven contracts, including four at its Jänschwalde site in Brandenburg, two at Boxberg in Saxony and one for Gaskraftwerk Leipheim, its subsidiary in Bavaria. RWE takes three in North Rhine-Westphalia, at Voerde, Weisweiler and Werne. The last award goes to Stadtwerke Karlsruhe for a plant in Baden-Württemberg, a utility that is majority owned by local authorities. Most projects sit at existing or former coal plant sites. Handelsblatt, in a commentary, says RWE and LEAG together hold about 70% of the awarded volume and already play a dominant role in controllable capacity alongside EnBW and Uniper.

Brandenburg4

North Rhine-Westphalia3

Saxony2

Bavaria1

Baden-Württemberg1

Brandenburg

4 awards

North Rhine-Westphalia

3 awards

Saxony

2 awards

Bavaria

1 awards

Baden-Württemberg

1 awards

Data from the article text

Costs and the levy

The average award price is 155,296 euros per megawatt of credited capacity per year, well below the 244,000 euro maximum set for the tender. Operators are paid for 15 years from commissioning, even if the plants run only a few hours a year. Reuters calculations put annual payments at about 800 million euros, or roughly 12 billion euros over the contract term. The Bundesnetzagentur says the competition pushed the funding costs down, and net costs could be lower because operators must return part of their revenue when power prices are very high. The costs will be recovered through a new levy on all electricity consumers, whose size is still open; Handelsblatt reports that it is to be introduced in 2027 and collected from 2031. Brandenburg's minister-president Dietmar Woidke welcomed the LEAG awards but was critical of the costs, speaking at Politico's Competitive Germany Summit in Berlin.

Criticism over market power and emissions

Greens politician Michael Kellner told Reuters that the tender design had backfired and that the results give the old coal companies a dominant position.

“The results create enormous market power for the old coal companies RWE and LEAG.”

The environmental group BUND objected that several awards went to old lignite plants being converted to gas, which it says are less efficient than new plants and therefore more harmful to the climate. Deutsche Umwelthilfe said LEAG received awards for six plants and suggested that the conversion of lignite sites, funded by state awards, could explain why bids came in lower than expected. Greenpeace argued that the government keeps the country tied to fossil gas and that cheaper alternatives such as battery storage were effectively excluded. The Bundeskartellamt had earlier judged RWE's market position to lie well above the presumption threshold for market dominance, and LEAG's to be slightly above it.

Timeline and next steps

The plants must be operating by 2031, and Tagesschau reports that they are to secure supply from November 2031. A further bidding round starts shortly, and two more tenders are planned. Germany aims to have exited coal power by 2038, while the gas plants are to run on hydrogen by 2045 at the latest.