Germany’s Minister for Economic Affairs, Katherina Reiche, is pushing for the expansion of gas-fired power plants. Though, a fresh study reveals that electricity generated from natural gas could cost as much as 67 cents per kilowatt-hour – seven times more than renewable energy sources.
Berlin is planning to expand gas-fired power plants as a cornerstone of the energy transition. But a new analysis from the Forum Ökologisch-Soziale Marktwirtschaft (FÖS) exposes this strategy as a costly misstep. The findings come as European energy markets remain sensitive to geopolitical risks and supply chain disruptions.
The true cost of gas-generated electricity could reach 67 cents per kilowatt-hour when all factors are considered, according to the FÖS study. In contrast, wind and solar power currently cost less than 10 cents. While Minister Reiche is advocating for fossil fuels, the data reveals an inconvenient truth: Germany risks increasing its dependence on volatile markets and obscuring the actual costs involved.
Hidden Billions
The German government initially plans to add 10 gigawatts of new gas-fired power capacity, requiring, according to t-online.de, 6.6 billion euros in subsidies. However, What we have is just the beginning. The FÖS study incorporates so-called “total societal costs” – including climate damage, subsidies for gas storage and LNG terminals, and tax exemptions for electricity generation.
A single 500-megawatt plant could generate up to 2 million tons of CO₂ by 2045, resulting in climate damage of up to 7 billion euros. These costs are not reflected in official calculations but will ultimately be borne by everyone.
Geopolitical Roulette
Recent tensions in the Middle East underscore how quickly gas prices can spike. Within days, the European gas price doubled from 32 to 65 euros per megawatt-hour. During crises, electricity generation costs can climb to as high as 53 cents per kilowatt-hour – excluding climate costs. Germany currently imports 95% of its natural gas, exposing it to geopolitical shocks.
Any conflict in the Middle East or Central Asia drives prices higher. Relying on gas is akin to playing Russian roulette with energy security.
The Alternative is on the Table
Storage technologies, bioenergy, and green hydrogen can guarantee supply security at comparable or lower costs – without price shocks. Wind and solar power cost a maximum of 10 cents per kilowatt-hour, even under unfavorable conditions.
The FÖS analysis demonstrates that renewable backup options are not only more environmentally friendly but also economically superior. Despite this, the German government remains committed to its unilateral gas strategy. Florian Zerzawy of FÖS notes that natural gas is already heavily subsidized in Germany, from gas storage to tax benefits, distorting competition to the detriment of renewable alternatives.
Content Partnership
This article was created in partnership with Business Punk
Business Punk Check on Germany’s Gas Strategy
Berlin’s gas power plant strategy is economic self-deception. Official electricity generation costs of 23 to 28 cents obscure the true burdens. When climate damage, subsidies, and crisis risks are factored in, the cost reaches 67 cents – seven times more expensive than green power. Instead of launching technology-neutral tenders, the government is pumping 6.6 billion euros into fossil infrastructure. This isn’t energy policy; it’s lobbying for the gas industry.
For businesses, this means calculating with unrealistic prices if they rely on gas-generated electricity long-term. Any geopolitical conflict can double costs. A smart approach is to invest now in renewable capacity – storage, photovoltaics, and load management. The technology is available, the costs are transparent, and the risks are calculable. Gas-fired power plants are the opposite: expensive, dependent, and harmful to the climate. Germany doesn’t need a fossil bridge technology anymore; it needs the courage to tear down the bridge.
