Nuclear a cash cow for Germany's plans

06 September 2010

German nuclear power plants are set to operate for longer after a policy change from Angela Merkel's government gave them a short-term extension in return for billions in taxes. 


Neckarwestheim (EnBW)
Neckarwestheim 2 could now operate
until around 2036 (Image: EnBW)
Speaking on the night of 5 September, German Chancellor Angela Merkel announced a new political deal that 'extends the lives' of Germany's current nuclear reactor fleet. Reactors built before 1980 would be allowed to operate for a further eight years beyond limits imposed in 2002, and newer reactors would gain another 14 years. 


The deal amends a 34-year average reactor life limit imposed in 2001 by a coalition of the Social Democratic Party (SDP) and the Green Party. The new policy comes one year after Merkel's coalition of Christian Democratic Union (CDU) and Free Democrat Party (FDP) gained power on a manifesto that promised to extend the use of nuclear power as a 'bridge' to a hypothetical future powered 80% by renewables in 2050. An FDP spokesman heralded the new plan as a "great success". 


The nuclear industry welcomed the extension of permitted operation, but warned of the unsustainable position Germany had taken. Head of the World Nuclear Association John Ritch said, "Germany's policy is now headed in the right direction but still rests on delusional foundations. No serious energy or environmental planner believes that a major economy like Germany's can be largely reliant on renewables within the next 40 years."



  "On the whole, the
  government has
  tightened the screws
  quite considerably and
  would skim off most of
  the windfall profits." 
Johannes Teyssen
  CEO of EOn

Owners of Germany's nuclear power plants EOn, RWE, Vattenfall and EnBW may profit to some extent from the extension, having repaid the cost of building the plants some years ago, but the extra time gives little incentive for sound investment in the facilities' safety or performance. Further uncertainty arises from the SDP's vow that it will reverse any extension of the nuclear plants' lifespans if it returns to power.


Financially the compromise also exacts a "considerable burden" on the utilities, said EOn CEO Johannes Teyssen: "On the whole, the government has tightened the screws quite considerably and would skim off most of the windfall profits."


The major new cost will be a tax of €145 ($186) per gram of nuclear fuel, which works out at around €2.3 billion ($2.9 billion) per year. This will be paid into Germany's central budget for six years to aid austerity measures. It is seen as notionally supporting the costs of radioactive waste management work at Asse. 
German nuclear utilities will also be called upon to make annual payments of €300 million ($386 million) in 2011 and 2012 to support renewable development, with this lowering to €200 million ($257 million) for the period to 2016. Beyond that, there is to be a tax on every megawatt-hour of nuclear energy produced that will be placed in a 'renewable fund'. Sources said this would be less than the tax on nuclear fuel.
Nuclear power remains Germany's main source of low-carbon energy, with 21% of generation, but the government still declares its intent to end its use of nuclear energy, while scaling up renewables from their current 6%. Meanwhile fossil fuels, primarily coal, provide 67% of electricity. On this, Ritch noted Germany's "admirable record in producing nuclear energy safely and efficiently" and said it was "tragic that German politicians remain too timid to embrace this simple reality."


EOn warned that "concrete implications" of the extension on the lifespan of each plant still needed to be examined, but extrapolation from previously published dates shows no German reactor would now be expected to shut before 2016. The next five pre-1980 reactors could close by 2020. Eleven further units will get 14 more years, with the last to operate being Neckarwestheim 2 - due for closure in around 2036.
Researched and written
by World Nuclear News