The European Commission has approved a German capacity mechanism valued between €15.6 billion and €35.2 billion under EU State aid rules to guarantee electricity grid security starting in 2031. Designed to balance supply and consumption, the scheme uses competitive auctions to remunerate power generation, energy storage, and demand-response providers for maintaining availability.
- Winning assets will secure long-term contracts lasting up to 15 years, with annual system costs estimated at €1 billion to €3 billion in 2031, stabilizing between €0.9 billion and €2.3 billion annually from 2032 through 2045.
- The mechanism imposes strict decarbonization mandates on participating infrastructure.
The initial tenders in 2026 and 2027 will be restricted to new long-term capacity constructed inside Germany. Subsequent auctions planned for 2027 and 2029 will shift to a fully technology-neutral model, opening participation to both existing and new assets.
These later stages will also extend eligibility to foreign capacity assets located in directly connected neighboring EU power grids, reinforcing cross-border market integration and system resilience.