Proposal for financing German nuclear phase-out

28 April 2016

The commission reviewing the financing of Germany's nuclear phase-out has recommended to the government that the reactor owners pay some EUR23.3 billion ($26.4 billion) into a state-owned fund for decommissioning of the plants and managing radioactive waste.  

Following the Fukushima accident in March 2011, the government of German Chancellor Angela Merkel announced the withdrawal of the operating licences of eight German nuclear power plants and revived plans to phase out nuclear power by 2022.

The independent commission - the Kommission zur Überprüfung des Kernenergieausstiegs (KFK) - was set up in October 2015 by the German government. Its mandate is to develop recommendations for action, such as ensuring the financing of the decommissioning of the country's reactors and the disposal of radioactive waste can be secured so that the utilities involved are financially able in the long term to fulfill their obligations in the nuclear area.

The commission yesterday presented its recommendations to the Ministry of Economics and Energy.

The KFK suggests, "The tasks of storing and final disposal of radioactive waste and the necessary funds are transferred to the state as security. For the remaining tasks - in particular the decommissioning and dismantling of the nuclear power plants and the packaging of waste - they and the financial security remain with the company."

The commission says the utilities involved - EnBW, EOn, RWE and Vattenfall - should pay EUR4.7 billion to the state to secure the financing of interim storage, the production of repository containers for waste from reprocessing and the transport from the interim storage facility to the final repository. The companies will become entirely liable for carrying out these tasks.

The commission also recommends the utilities pay EUR12.4 billion to the state fund to finance the selection, construction, operation and decommissioning of a radioactive waste repository.

The companies should also pay a "risk premium" of around 35% to close the gap between provisions and costs, the KFK said. This brings the total amount expected from the utilities to EUR23.3 billion. It says the payments could be made in stages over the next few years.

The commission also recommended that shut down reactors are dismantled as soon as possible, rather than sealed for several years to allow the radioactivity to reduce naturally. It called for the government to make the process for obtaining decommissioning permits faster and more efficient.

Presenting its recommendations, the commission said, "The proposed combination of securing action and financial obligations establishes the basis for a new disposal consensus. This consensus represents a gain of security for the companies and society. It represents an opportunity to end the dispute over the use of nuclear energy for good."

The Ministry of Economics and Energy said it will now examine the KFK's recommendations and consult with other government departments on actions that should be taken to implement the recommendations.

Industry response

"We welcome that there has been an open and constructive dialogue with the nuclear commission and the companies concerned about the commercial and regulatory framework for the German nuclear phase-out," said Vattenfall senior vice president for markets Stefan Dohler. "The proposals of the KFK appear to the four affected energy companies - and thus also in our view - in principle [to be] a feasible way to organize and finance the nuclear power phase-out."

He said, however, the so-called risk premium is "disproportionate to the economic strength of the affected utilities".

"We will analyse the proposal of the commission, hoping to find a joint solution with the German government on how to tackle the still open issues," Dohler added. "We take responsibility for this process but can't offer financial solutions which are contrary to the given commercial and legal framework."

In a joint statement, the four utilities said that, in talks with the KFK, they had been willing to accept a risk premium to enable a consensus. However, the suggested "huge" risk premium "overburdens" their "economic capabilities". They said they "cannot accept the suggestions as they are, least of all due to their responsibilities towards their employees, their customers and their shareholders".

The companies have already built up the necessary provisions for the phase-out of nuclear generation. These provisions, they say, amount to EUR40 billion and have been approved by the government and the KFK "to be adequately and correctly represented in the companies' balance sheets".

The utilities said they would make an in-depth analysis of the KFK's recommendations before making a final assessment. They are "still interested in achieving a consensual solution" to the organization and financing of the country's nuclear phase-out and "are ready to add their suggestions to further political discussions".

Researched and written
by World Nuclear News