The German government has agreed to a $17bn plan to subsidise hydrogen-ready gas power plants in the country.

An announcement in this regard came from the German Economy Ministry, reported Reuters. It is part of initiatives aimed at expediting the transition to low carbon power generation and bolstering intermittent clean energy sources.

Besides, the ministry stated that the tender process for four gas plants with a combined capacity of up to 10GW would be held shortly.

According to the ministry, the hydrogen transition plans should be finalised by 2032, allowing the gas power plants to operate completely on hydrogen fuel between 2035 and 2040.

The government’s support for companies to construct and operate the future hydrogen-ready gas power plants will total approximately €16bn. This financial backing is for both capital and operational subsidies, reported the news agency citing two coalition sources.

Furthermore, the German government will subsidise power plants operating solely on hydrogen with a capacity of up to 500MW for energy research purposes.

Additionally, the government announced that a new design for the electricity market would include a market-based capacity mechanism. It is expected that the mechanism would be agreed by the middle of 2024 and to be operational by 2028.

The hydrogen-ready gas power plants are anticipated to help the country exit coal by 2038.

However, German environmental group Deutsche Umwelthilfe said that the agreement between the coalition leaders on the power plant strategy remains unclear and is on the lowest common denominator.

Deutsche Umwelthilfe federal managing director Sascha Müller-Kraenner said: “The so-called agreement on the power plant strategy leaves many questions unanswered. In the short term, 10 gigawatts of H2-ready gas power plants are to be put out to tender.

“It is clear that this is not green hydrogen. We need a largely climate-neutral electricity system by 2035.

“Instead, the traffic light proposal postpones the transition date for fossil power plants to 2035 to 2040.”

In July 2023, RWE revealed plans to construct an 800MW hydrogen-capable combined-cycle gas turbine (CCGT) power plant at its Weisweiler site in Germany by 2030 to support coal phase-out efforts.