Germany's inaugural auction for 4.5 gigawatts of gas-fired power capacity attracted offers exceeding the amount of capacity available, the country's energy regulator said on Wednesday. The regulator added that the identities of successful bidders are scheduled to be disclosed by early November.
The auction is the opening segment of a broader program that will procure 11 gigawatts of gas generation capacity for Europes largest economy. According to the plan, further procurement rounds will follow in December and again in 2027, extending the timeline of capacity awards beyond the initial tender.
The framework for the tenders was settled in January and is framed as part of Germanys strategy to reduce reliance on coal by increasing use of gas, described in official terms as a less carbon-intensive fuel. The European Commission gave its approval to the support scheme last week, clearing the way for national implementation.
Officials estimated the program could cost as much as 35.2 billion, which is equivalent to $41 billion, reflecting the scale of public support envisaged for the capacity procurement. Participation by established utilities was signaled in advance: German power companies RWE and Uniper had indicated plans to seek capacity in the auction, aiming together to offer 4.7 gigawatts of bids.
For market participants and utilities, the immediate result is clear - demand for the initial tranche outstripped available volume. The oversubscription means not all bidders will secure capacity in this first round, and some participants will need to await the results and subsequent rounds to achieve their capacity targets.
With winners to be announced in early November and additional tenders set for December and 2027, the procurement program establishes a multi-year schedule for adding gas-fired generation. The schemes approval by the European Commission and its large estimated budget underline the government's commitment to managing the transition from coal toward gas-fired power within the parameters set out by policymakers.
Context note: The regulator made the oversubscription and the timing of the award public on Wednesday. The procurement framework was agreed in January and received European Commission approval last week.