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European Energy Markets
20JUL

StromVKG passes, bid ceiling up 41%

2 min read
11:19UTC

The Bundestag passed StromVKG on 9 July with SPD votes, raising the capacity-auction bid ceiling 41% to EUR 244,000/MW and splitting new capacity one-third north, two-thirds south.

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Key takeaway

Germany raised its capacity-auction ceiling 41%, choosing firm-supply certainty over auction price discipline.

The Bundestag passed the StromVKG capacity law in final plenary on Thursday 9 July, the CDU/CSU and SPD carrying it against AfD, The Greens and the Left 1. StromVKG, Germany's electricity capacity-payment statute, commissions 11 GW of new hydrogen-ready gas capacity, with the first 9 GW tendered in two 4.5 GW tranches on 8 September and 22 December 2026 and a network-charge surcharge of EUR 1-3bn a year from 2031.

Committee stage changed the auction economics. The bid ceiling rose from EUR 173,000/MW to EUR 244,000/MW, a 41% increase that lifts the clearing cost operators can bid into 2. A locational split now directs one-third of new capacity to northern Germany and two-thirds to the south, where industrial load concentrates and the retired nuclear fleet once anchored the grid, and barriers for battery-storage bidders were lowered. The arc ran from first reading through the 24 June Anhoerung to committee clearance, where the Greens' hydrogen-conversion motion failed .

The SPD threatened to block this law in April; it passed on 9 July with SPD votes. Raising the ceiling 41% signals that the government expected the September auction to clear thin at the old cap and chose cost certainty over price discipline. Germany is legislating dispatchable backup precisely as its merchant CCGTs whipsaw on the clean spark spread, and the capacity payment funds the firm megawatts that spread will not.

Deep Analysis

In plain English

StromVKG is a new German law, finally passed by the Bundestag on 9 July, designed to make sure Germany has enough back-up power plants for days when wind and solar are not producing much electricity. It works by paying gas-fired power plant operators in advance to have capacity ready, through a competitive auction, rather than only paying them when they actually generate power. The final version raises the maximum price the government will pay in that auction by 41%, and splits where the plants can be built: roughly a third in the north, two-thirds in the south, because the country's power grid cannot easily move electricity between the two regions. All new plants must be able to run on hydrogen by 2045.

Deep Analysis
Root Causes

The 41% bid-ceiling increase responds to a structural gap exposed on 30 June, when the lowest wind week of the year combined with a heat surge to push Germany's day-ahead price to EUR 195/MWh with every incremental megawatt coming from thermal plant . Without enough dispatchable capacity cleared in advance, a renewables-heavy grid repeats that exposure on any low-wind day.

The north-south locational split addresses a separate constraint: Germany's transmission grid cannot move enough power from northern wind and southern demand centres without local generation, which is why the law now pays roughly twice as much capacity to site in the south specifically.

What could happen next?
  • Consequence

    A higher bid ceiling raises the network-charge surcharge German consumers eventually pay for capacity, a cost financed from 2031 estimated at EUR 1-3bn a year.

  • Meaning

    The north-south locational split formally acknowledges that Germany's grid, not just its total generation capacity, constrains supply security.

Sources:Deutscher Bundestag
Mentions:Bundestag →StromVKG →CDU/CSU →SPD →Alliance 90/The Greens →AfD →Left →Germany →Uniper →ACER →
First Reported In

Update #25 · Qatari LNG strike puts TTF back over EUR 50

Deutscher Bundestag· 10 Jul 2026
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Causes and effects
Caused by
Bundestag opens its gas-plant subsidy law debate
First reading opened the legislative arc that concluded in final passage.
Occurred 11 Jun 2026
Read story →
Capacity law faces 24 June hearing
The Anhoerung tested the draft ahead of committee clearance and final passage.
Occurred 21 Jun 2026
Read story →
StromVKG hearing keeps Sept date intact
Committee clearance set the bid-ceiling and locational-split terms that took binding form on final passage.
Occurred 24 Jun 2026
Read story →
This Event
StromVKG passes, bid ceiling up 41%
Germany chose supply certainty over auction price discipline, raising the bid ceiling 41% to fill its capacity backstop rather than bargain on cost.
Led to
Berlin's 9 GW auctions await Brussels
StromVKG's 9 July passage created the capacity-auction framework that now awaits Commission state-aid clearance.
Occurred 9 Jul 2026
Read story →
Different Perspectives
Marine insurers and AIS trackers covering Hormuz
Marine insurers and AIS trackers covering Hormuz
AIS data shows severe curtailment on 20 July, 479 vessels anchored, 36 dark, 123 still broadcasting inside the strait, not the closure the IRGC claims. War-risk premiums move on the unresolved CENTCOM-IRGC contest itself, since underwriters price the dispute as much as the count.
QatarEnergy
QatarEnergy
Ras Laffan has run at minimum output under force majeure into August since 9 July, a constraint already priced before this week's claim. The 17-20 July move is risk premium stacked on that standing loss, not a new physical loss at the plant.
ACER and the European Commission
ACER and the European Commission
ACER opened the REMIT reporting consultation on schedule on 16 July, giving firms to 11 September before a quarter to build systems against Regulation 648/2012. Brussels' separate silence on StromVKG state-aid clearance leaves Berlin's own capacity mechanism without legal authorisation.
EDF and French grid operator RTE
EDF and French grid operator RTE
France's discount to Germany rests on an ASNR derogation from the 28C river-cooling limit at Bugey that expires today, not on a nuclear recovery; Chooz, Golfech and Bugey restarts run to 25 July. The cheap leg holds only as long as regulators keep waiving the limit each heatwave.
German CCGT operators and grid balancers
German CCGT operators and grid balancers
German gas plants went off-merit on 20 July as the clean spark spread inverted to minus EUR 15 to minus EUR 21/MWh, sidelining the flexible capacity storage injection needs. Operators are pricing 2027-28 capacity revenue against Bundesnetzagentur's own admission that Brussels has not cleared the 9 GW StromVKG auctions.
LNG spreads desk
LNG spreads desk
The JKM-TTF arb flipped to a TTF premium of roughly USD 0.6/MMBtu on 15 July, the first time this cycle Europe has outbid Asia, yet no Atlantic cargo has rerouted west. Until a cargo actually moves, the desk reads the Hormuz premium as unconfirmed and the EUR 55 print as vulnerable to a fast reversal.