Germany gets informal EU go-ahead to support gas-fired power, sources say
BERLIN, June 7 (Reuters) - Germany won the European Union's informal approval to pay billions of euros to gas powered plants to be able to stabilise the grid when unsteady renewable energy supplies fall short, people familiar with the negotiations told Reuters on Friday.
An agreement in principle was reached with the EU's competition authorities for state support to utilities for the 10 gigawatt (GW) scheme but some details for an official approval are to be hammered out over the next few weeks, government and company sources said.
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They added that the German government secured an agreement to a set of terms that will change over time as the long-term scheme, which is known as the National Power Station Strategy, evolves.
Berlin expects to receive an EU document outlining the informal agreement on Friday, the sources said.
Germany is transitioning to renewables, having switched off nuclear power and seeking to phase out coal-powered electricity, but wants to give state support for natural-gas powered plants that underpin the grid during demand peaks and lows in unsteady supply from wind and solar power.
The power stations need to be able to also run on green hydrogen but the transition to the new fuel will likely be between 2035 and 2040, the government has said.
The German economy ministry did not confirm an agreement, and said that very good progress had been made in EU talks.
The EU Commission said it was in close and constructive discussions with German authorities but would not further comment on details or timing.
The state plans to tender contracts for utilities, such as RWE, EnBW and Uniper, to build and run the plants. Contracts will be based on financial rewards for standing by in what is known as a capacity market.
The reverse auctions will be designed to award contracts to companies agreeing to the lowest subsidies.
German Economy Minister Robert Habeck said on Thursday he was nearing an agreement after drawn-out negotiations with the EU.
Sticking points included uncertainty over when the plants will switch from natural gas to hydrogen, he added. The nation's Power Station Strategy was unveiled in February.
(Reporting by Markus Wacket in Berlin; additional reporting by Foo Yun Chee in Brussels; writing by Ludwig Burger; editing by Andrey Sychev and David Evans)