Berlin – A new analysis released today by the Forum Ökologisch-Soziale Marktwirtschaft (FÖS) casts serious doubt on the German government’s strategy of relying on natural gas power plants as a cornerstone of the energy transition, revealing that the true cost of gas-generated electricity could be as high as 67 cents per kilowatt-hour – seven times the cost of wind and solar power.
The findings come as Economics Minister Katherina Reiche (CDU) continues to champion the expansion of gas-fired power generation to ensure energy security following the phase-out of coal. The government initially planned to add 10 gigawatts of new gas power capacity, a move requiring approximately 6.6 billion euros in subsidies, according to t-online.de. However, the FÖS study argues that this figure represents only a fraction of the total cost.
The analysis incorporates what it terms “gesamtgesellschaftliche Kosten” – encompassing climate damages, subsidies for gas storage and LNG terminals, and tax exemptions for gas-fired electricity generation. According to the report, a single 500-megawatt gas plant could generate up to 20 million tons of CO₂ by 2045, resulting in climate damages potentially reaching 7 billion euros. These costs, the FÖS argues, are not reflected in official government calculations.
The reliance on gas also exposes Germany to geopolitical risks, as highlighted by recent volatility in European gas prices following tensions in the Middle East. The price of European gas doubled from 32 to 65 euros per megawatt-hour within days, demonstrating the vulnerability of a system dependent on 95 percent imported gas. In crisis situations, electricity generation costs from gas can surge to 53 cents per kilowatt-hour, even before factoring in climate-related expenses.
The FÖS report contends that alternative solutions – including energy storage technologies, bioenergy, and green hydrogen – can provide comparable or lower costs without the price shocks associated with fossil fuels. Wind and solar power, even under unfavorable conditions, can be generated for a maximum of 10 cents per kilowatt-hour.
Florian Zerzawy of FÖS emphasized that natural gas is already heavily subsidized in Germany, from storage facilities to tax benefits, distorting competition and disadvantaging renewable alternatives. “Erdgas wird in Deutschland bereits massiv subventioniert, von Gasspeichern bis zu Steuervorteilen. Diese Förderung verzerrt den Wettbewerb zulasten erneuerbarer Alternativen,” Zerzawy stated.
The debate over Germany’s energy strategy comes amid ongoing scrutiny of Minister Reiche’s plans. In May 2025, Reiche called for a “reality check” for the energy transition, advocating for the rapid construction of at least 20 gigawatts of gas power plants to supplement intermittent renewable energy sources, as reported by pv-magazine.de. However, these plans have faced criticism from within the government and industry, with concerns raised about their cost and potential legal challenges under EU law, as noted in a report in Focus.
In June 2025, Merkur.de reported that Reiche may demand to utilize a law previously enacted by former Economics Minister Robert Habeck (Greens) to facilitate the gas power plant expansion, as the EU Commission had not yet given its approval. The Habeck law, the Kraftwerkssicherheitsgesetz (KWSG), originally aimed for 12 gigawatts of gas power capacity, with a focus on hydrogen-compatible plants.
As of January 8, 2026, the tendering process for new gas power plants remained stalled due to a lack of agreement with the EU, according to taz.de. The government’s commitment to the gas strategy remains firm, but the economic and geopolitical realities outlined in the FÖS report raise questions about its long-term viability.
The European Commission approved a plan to allow state aid for new gas-fired power plants in February 2024, but with strict conditions regarding their use and a deadline of 2030, as reported by Tagesschau.de. The plan, championed by Katherina Reiche, involves billions in state funding.
