Germany Grants $13 Billion Gas Power Plant Contracts to LEAG, RWE in Energy Shift
Germany's Energy Transition and Gas Power Plant Contracts
By Christoph Steitz and Holger Hansen
FRANKFURT/BERLIN, Nov 3 (Reuters) - Germany on Tuesday awarded contracts worth around €12 billion ($13.4 billion) to build new power plants or repurpose existing ones to run on gas, with LEAG, owned by Czech billionaire Daniel Kretinsky's EP Group, and RWE emerging as the winners.
The result of the much-anticipated first tender for 5.16 gigawatts of new round-the-clock power capacity is part of Berlin's push to secure energy supply in Europe's top economy once coal-fired stations are switched off.
Subsidies and Consumer Impact
Under the scheme, gas-fired power plants will be subsidised to be available at times of lower supply from other sources such as solar and wind. The costs will be slapped onto consumer bills via an extra levy.
Winners of the Tender
LEAG's Success and Expansion
At around 3 gigawatts, LEAG and its subsidiaries came out first, followed by 2.12 gigawatts for RWE, Germany's biggest power producer.
"The results of the tender process represent an important first step towards ensuring a long-term, cost-effective electricity supply," Klaus Mueller, head of Germany's energy regulator, said in a statement.
LEAG's Strategy and Location Advantages
LEAG said the fact that most of the plants will be built at existing locations in eastern Germany would save costs and cut the time it takes to build them.
"We are building new, modern power stations of the future at existing power station sites, conserving resources and creating long-term prospects," CEO Adi Roesch said.
RWE's Role and Market Response
POWER STATIONS AT EXISTING SITES
RWE said it welcomed the decision under which it will be able to build three new power plants in Germany. Its shares were up 1.4% by 0942 GMT.
Uniper, which was not awarded capacity in the first round, said it would analyse the results of the first tender.
Financial Details and Future Outlook
Contract Values and Pricing
The average price at which capacity was awarded was €155,296 per megawatt, far below the maximum price of €244,000, which will be paid over 15 years under the scheme aimed at incentivising new plant capacity.
Energy Security and Renewable Expansion
"The new gas-fired power stations will provide a reliable source of power that will be available from 2031 at the latest, when wind and solar power are unable to supply sufficient electricity," German Economy Minister Katherina Reiche said.
"In this way, we are ensuring the continued expansion of renewables and the phase-out of coal."
Upcoming Tenders and Regulatory Plans
Germany is tendering a total of 11-12 GW of capacity, costing up to €35.2 billion, with the current tender to be followed by additional rounds in December and in 2027.
Germany's energy regulator, which in September said the first tender was significantly oversubscribed, said the date for the second round would be published on November 10.
Currency Exchange Rate
($1 = €0.8937)
(Reporting by Christoph Steitz and Holger Hansen; Additional reporting by Tom Kaeckenhoff; Editing by Thomas Seythal and Susan Fenton)