EU approves billions in German state aid for gas-fired power plants

The European Commission on Wednesday gave the green light for a German state aid scheme providing up to €35.2 billion ($40.7 billion) to support the construction of new gas-fired power plants.

Berlin plans to build several gas-fired power plants with a combined capacity of up to 11 gigawatts over the next five years, but the financial support required approval from Brussels.

State aid in the EU is subject to strict rules to prevent distortion of competition and to ensure a level playing field between companies from economically strong member countries, like Germany, and less affluent ones.

The commission said in a statement that the German measure is necessary for security of energy supply and that the level of funding is appropriate.

The new plants will initially burn natural gas, a process which produces greenhouse gases, but will be required to switch to climate-friendly hydrogen by 2045.

The new power stations are intended to help prevent potential gaps in electricity supply from 2031 onwards by going online when power generation from renewable sources, like wind and solar, is insufficient.

In parallel, Germany plans to continue expanding renewable energy production.

By 2030, at least 80% of electricity is expected to come from wind, solar and other renewable sources. Germany also aims to phase out coal-fired power generation by 2038.