Söder and Özdemir attack gas plant tender rules favouring northern Germany

New conversion rules

Germany's economy ministry said on Tuesday evening, 10 November 2026, that it will issue a regulation tightening the rules for converting coal-fired power plants to gas. Under the regulation, a conversion counts as eligible new construction only if the old coal plant was already shut down on 22 July 2026, or if the coal phase-out law requires it to close by 1 January 2030 at the latest. The ministry wants to stop operators from shutting coal plants early in order to collect subsidies. The regulation also sets which spending counts toward the mandatory minimum investment of 431,000 euros per megawatt of eligible capacity, and only investment in new plants or expansions qualifies, not mere modernisation. The ministry says the rules should take effect soon and leave existing awards untouched, because all successful projects also meet the tightened conditions.

Why the first round drew criticism

Katherina Reiche had called the first tender a success before the criticism came, saying:

“The first tender under the StromVKG is a great success. We are moving the power plant strategy from planning into implementation.”

The Bundesnetzagentur announced the results in the week of 2 November 2026. Eleven projects won awards, and RWE and LEAG took ten of them. LEAG plans to convert six lignite units in Brandenburg and Saxony to gas rather than build new plants, a route that made its bids far cheaper. A study commissioned by Uniper projects almost 10 billion euros in additional costs over the next 15 years, because the converted plants run less efficiently, burn more gas and cannot ramp up and down as flexibly as the reserve plants are meant to. Environmental groups, including the BUND, argued that the converted old coal units are less efficient than new plants and therefore more damaging to the climate.

Southern states demand a larger share

Markus Söder and Cem Özdemir, the Minister-Presidents of Bavaria and Baden-Württemberg, jointly called the first-round results insufficient and demanded a correction from the federal government. Söder told Handelsblatt that the federal government must act immediately, and he called the first round "fatal" and "completely misguided industrial policy". The so-called southern bonus lowers a bidder's price by a lump sum and applies only once a third of the tender volume has gone elsewhere, yet 53% of awards went to the north. Tagesspiegel notes that North Rhine-Westphalia counts as part of the southern grid region and has many older coal plants, so the bonus could still benefit old coal capacity there. Özdemir said:

“Anyone who wants supply security and economic growth must build new gas power plants where they are needed.”

Özdemir set a target that two-thirds of the new capacity be built in the south. Söder, for his part, described the southern economy as the country's economic heartland and warned that the current approach endangers industrial jobs.

Second round and cost

The second tender covers 3,840 megawatts of eligible capacity, and bids can be submitted until 29 December 2026. The ceiling price stays at 244,000 euros per megawatt per year, and support is paid over 15 years. The volume is smaller than originally planned because the first round awarded more capacity than intended. The new plants are to supply power from November 2031, when wind and solar output falls short. Handelsblatt puts the total payments promised across all awards at around 12 billion euros gross over 15 years, costs that electricity customers will ultimately bear.