EU approves German capacity mechanism

The European Commission approved Germany's capacity mechanism on 2 September 2026, per pv magazine. The scheme unlocks up to €35.2 billion in state support and covers generation assets, storage, and demand-side flexibility resources.

Auctions will be used to allocate capacity contracts, a design the Commission typically requires to minimise state-aid distortion. A key condition: any new gas-fired plant entering the scheme must be hydrogen-ready, with full climate-neutral operation mandated by 2045. That retrofit obligation directly links near-term capacity adequacy to longer-run decarbonisation targets in the German zone.

In a parallel development, Renews.biz reported that Berlin is considering indexation for offshore wind contracts-for-difference following a draft legislative change. Industry groups have welcomed the move. Together, the two items suggest Germany is undertaking a broad regulatory reset of its power-market support architecture heading into the back half of the decade.