For a built gas-fired power plant with 500 MW capacity and 1,000 full-load hours – a realistic assumption for backup operation – levelized electricity costs are around €0.192/kWh, of which €0.068/kWh covers gas, the most volatile component. Adding €100 per ton of CO₂ under emissions trading raises the cost to €0.23/kWh. Including externalized costs – those not borne by the plant operator – pushes the total to €0.35–€0.67/kWh. Geopolitical crises could drive costs even higher.
The short study, prepared by Berlin-based energy think tank FÖS f0r Green Planet Energy, said that gas-fired power plants planned by the German federal government as a backup for an increasingly renewable-based grid are “one of the most expensive options for supply security.”
The study compares levelized costs from gas plants, including emissions trading, with wind and solar PV, which remain below €0.10/kWh even under conservative assumptions. It also considers renewable-based backup options, which would avoid costs such as CO₂ and methane climate damages, government subsidies, crisis-related costs, and long-term fossil import dependencies.
Price spikes triggered by the Iran war show how quickly gas can become a cost risk in electricity generation. Crisis events, such as Russia’s invasion of Ukraine, can push levelized costs of natural gas to €0.53/kWh, excluding climate damages.
Subsidies are also required; without them, new gas plants are unprofitable. The study estimates that the 10 GW of gas capacity initially planned by the federal government would incur roughly €6.6 billion in support costs. Florian Zerzawy, FÖS lead author and head of energy policy, noted that Germany already heavily subsidizes natural gas, from multi-billion-euro grants for storage and LNG terminals to tax exemptions for electricity generation. These subsidies artificially lower gas electricity costs and distort competition against renewables.
The climate impact of gas is systematically underestimated. Each new plant emits up to 8.4 million tons of CO₂ over its lifetime, causing climate damages up to €7 billion, not covered by the CO₂ price. For Germany, which imports 95 percent of its gas, much of these emissions occur abroad during extraction and transport. Depending on source and transport, natural gas can be more climate-damaging than coal.
By contrast, storage, bioenergy, and green hydrogen can provide electricity at comparable or lower costs than natural gas. Sönke Tangermann, a board member at Green Planet Energy, said these renewable options avoid the geopolitical price spikes that repeatedly drive up fossil fuel costs. The organization added that it calls for technology-neutral procurement, stable investment conditions for renewables, and stronger grid flexibility.
The study “Teure Option für die Versorgungssicherheit: Die wahren Kosten von Strom aus Erdgas” is available for free download as a PDF.
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The people that produced this report do not seem to understand that gas is essential (which makes a nonsense of putting carbon levies on it). Without gas to balance the grid supply and demand the grid will fail Gas and other synchronous sources of generation also provide technical attributes that renewables lack.
Renewables are not a replacement but an addition, so increasing unit cost to the consumer.
The authors also do not seem to have had the memo, CO2. is not driving climate and it’s reduction will do nothing.
False