Insurance for the energy transition Decarbonization in Germany

FAU study highlights the role of hydrogen-compatible gas-fired power plants and warns of a gap in current planning

Germany aims to be climate neutral by 2045. What technologies are needed to make the energy supply CO2-neutral, and what role can hydrogen-compatible gas-fired power plants play in this process? Professor Dr. Mario Liebensteiner focuses on these questions in a study on the decarbonization of the German energy system. In conjunction with his colleagues, the economist at Friedrich-Alexander-Universität Erlangen-Nürnberg (FAU) provides specific figures on capacity requirements, costs, and emissions – and places these in the context of the political debate on power plant strategy. The study, published in the renowned journal Applied Energy*, is also highly relevant to the current debate on new gas-fired power plants.

Under Federal Minister for Economic Affairs and Energy Katherina Reiche, discussions are currently underway to determine which of these should be hydrogen-compatible, how much new capacity Germany needs, and which power plant strategy can be coordinated with the EU. “If politicians stick to their climate targets of becoming climate neutral by 2045, the right decisions must be made now,” emphasizes Mario Liebensteiner, Professor of Energy Markets and Energy Systems Analysis at FAU He continues: “Decarbonization will be expensive anyway, but how expensive depends on whether you invest now in controllable and hydrogen-compatible power plant capacity.”

With this question in mind, he worked with his colleague Prof. Dr. Niklas Hartmann from Offenburg University of Applied Sciences and Anas Abuzayed, a doctoral candidate working with Mario Liebensteiner at FAU, to model decarbonization pathways up to 2045: the date by which the German energy system is supposed to be CO2-neutral. The model calculates what investments in power plants, storage facilities, and grids are required and how different political conditions affect this. Key finding: “A system with very high proportions of wind and solar energy needs flexible backup capacities,” emphasizes Mario Liebensteiner. “During what is known as dark doldrums, when neither the wind is blowing nor the sun is shining, the supply must still be guaranteed at all times.”

Low utilization, yet still necessary

Hydrogen-compatible gas-fired power plants would be able to close this gap. These plants will initially be powered by natural gas, but can later be completely converted to hydrogen – ideally green hydrogen from renewable energies. The study uses model calculations to show that hydrogen-compatible gas-fired power plants offer valuable flexibility for the system. They reduce the need for additional battery storage and wind and solar capacity and minimize the curtailment of wind power by shutting down wind turbines in the event of overproduction. This saves costs and increases the efficiency of the entire system.

For these reasons, Mario Liebensteiner believes it would be sensible and important to invest in such power plant capacities that are not dependent on the weather, even if their utilization is low, as they primarily serve as a safeguard: “It is clear that they have an insurance value for the energy system. If the power plants did not exist and there was a period of low wind and low sunlight, our security of supply could suffer, which would be extremely costly in economic terms.”

Expansion to at least 53 gigawatts required: A gap in planning

One shortcoming lies in the gap between scientific analysis and political planning. “One finding of our study is that with at least 53 gigawatts of hydrogen-compatible gas capacity, security of supply can be guaranteed by renewable energies without having to invest in extreme overcapacity in wind, photovoltaics, and storage,” emphasizes Mario Liebensteiner. FAU Professor Liebensteiner says: “The Federal Network Agency also estimates the additional demand for controllable capacity by 2035 at up to 22.4 gigawatts.”

Together with today’s gas reserves, this results in almost exactly the same order of magnitude as suggested by the study for a climate-neutral electricity system. “However, as part of the power plant strategy currently agreed in principle with the EU Commission, Germany is initially only aiming for 12 gigawatts, and approval under state aid law by the EU Commission is still pending,” says Mario Liebensteiner. Overall, the study estimates the cumulative system transformation costs until 2050 at at least 324 billion euros. “Climate neutrality is possible, but it cannot be taken for granted and continues to require high costs,” says Mario Liebensteiner.

High CO2 price as leverage

“Our model shows that what would make sense from a systemic perspective is not necessarily what actually happens. That is precisely why it is important to promote policy that actually triggers investment,” emphasizes Mario Liebensteiner. From an economic perspective, a high CO2 price is the most efficient approach. It cost-effectively replaces fossil fuels, accelerates the phase-out of coal, and creates market-based incentives for investment in hydrogen-compatible power plants without additional subsidies. In this scenario, both cumulative emissions and system costs are lowest, although the profitability of the new power plants would have to be supported in some way.

Conclusion of the study: Decarbonization of the energy system in Germany is possible. However, it requires investment in flexibility. Without sufficient flexible capacity, there is a risk of rising costs, inefficient overcapacity, or risks to the security of supply.

Another study published by Mario Liebensteiner in collaboration with researchers from the University of Cambridge in Energy Strategy Reviews** goes one step further and examines whether gas-fired power plants can also be decarbonized using low-carbon fuel mixtures such as hydrogen, ammonia, or biomethane. It shows that such solutions may be relevant for the last mile of decarbonization, but remain economically challenging.

About the studies:

*Hydrogen-ready power plants: Optimizing pathways to a decarbonized energy system in Germany

**Exploring the feasibility of low-carbon fuel blends in CCGTs for deep decarbonization of power systems

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