EU greenlights Germany’s €450m measure to establish temporary lignite supply reserve

The measure will compensate the operators of five power plants for the costs of getting the plants ready to operate if there are natural gas shortages

Big Zero Report 2022

The European Commission has given the green light for Germany to enable lignite-fired power plants to be on stand-by and ready to be activated in the event of natural gas shortages.

The €450 million (£894m) measure will establish a temporary lignite supply reserve – consisting of five plants that are currently deactivated – and compensate the plant operators for the costs incurred in ensuring the plants are operational and ready to return to market if needed.

Germany will compensate the two affected operators, Lausitz Energie Kraftwerke and RWE, for the necessary costs incurred to ensure the plants are operational and ready to return to the market.

They will not, however, receive compensation for the time they are operating the plants as they will be participating in the market and earning revenues.

The aim of the measure, under which aid may be provided until 31st March 2024, is to save natural gas by providing the German and the European electricity system with additional generation capacity in the short-term in order to replace electricity generation from Russian natural gas.

It will contribute to safeguarding natural gas availability amid Russian natural gas shortages in the context of Russia’s war against Ukraine.

Executive Vice-President Margrethe Vestager, in charge of competition policy said: “This temporary measure will enable Germany to mitigate the economic impact of Putin’s war against Ukraine, as it will contribute to replacing gas in the event of shortage, thereby enhancing our preparedness for the next winter.”

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