Germany plans power and storage backup capacity scheme as renewables surge

Mechanism reportedly intended to ensure security of supply from 2028 on amid rapidly rising share of renewable energy

Germany’s government in October plans to decide on the key points of a capacity mechanism for backup power and storage needed to smooth out a growing share of intermittent renewable energy in the electricity system.

The timetable is part of a growth initiative presented by Chancellor Olaf Scholz’s Social Democrat-Green-Liberal coalition in the wake of a recent budget compromise that also included a controversial proposal to change the way subsidies for renewable power are paid, the Tagesspiegel newspaper said.

“It is planned that the capacity mechanism will ensure the security of electricity supply from 2028 onwards by offering operators bonuses for providing secure capacity,” the newspaper wrote in a newsletter.

“The mechanism will see run-of-river power plants, pumped storage, battery storage, bioenergy plants, other back-up power plants as well as storage and flexible loads compete against each other, according to the federal government's idea.”

Renewables have met a record 58% of Germany’s power consumption during the first half of this year (up from 52% a year earlier), and their share is targeted to rise to 80% by 2030 as Europe’s largest economy is pushing to reach net-zero in 2045. But while Germany is ahead among the world’s biggest economies in renewable power, it is lagging behind in the build-up of storage capacity.
The economics and climate ministry will shortly present a paper with various options for subsidies under the capacity mechanism, which subsequently will be discussed on a new platform for a climate-neutral power system.

The capacity mechanism is supposed to substitute the power plant security law which temporarily regulates support for the construction of hydrogen-ready gas-fired power plants.

Tenders under this regime are slated to start in the first quarter of next year (instead of still this year as originally planned), according to sources close to the economics and climate ministry, Tagesspiegel said, adding that 7.5GW are slated to be auctioned off for decarbonisation and 5GW for the security of supply.

The industrial sector is pointing to possible bottlenecks already and is pushing for a fast decision.

"In the report on the assessment of security of supply (ERAA) prepared by the European transmission system operators, load shortfalls cannot be completely ruled out as early as 2028," Christian Seyfert, general manager of the association of industrial energy and power industries (VIK), is quoted as telling Tagesspiegel.