Germany agrees nuclear exit
German chancellor Angela Merkel came to power determined to extend the lives of the country's nuclear power stations, but after the catastrophe in Japan she has bowed to public opinion and abandoned nuclear power, explains Simon Jones
Germany is to accelerate the closure of its nuclear power stations under an energy strategy agreed at a summit last month between chancellor Angela Merkel and the prime ministers of Germany's 16 federal states. All 17 German nuclear reactors now look set to close by 2022 at the latest.
The initiative was taken because of mounting public opposition to nuclear power following the crisis at Japan's Fukushima plant.
Such is the changed political climate for nuclear power that Merkel is prepared to ditch the September 2010 coalition deal that would have extended the operating lives of Germany's reactors into the mid-2030s.
Instead, expansion of gas and coal capacity is back on the agenda, together with yet faster wind power growth - both part of a six-point plan to make up any power shortfall arising from this nuclear shift. Lighter regulation of new renewable plant and major grid investments to prepare for a renewables-led future are further elements in the package.
Details were thin on the ground, but Merkel said her aim was to exit nuclear "as quickly as possible". She promised new legislation as early as June to finalise the policy and give an operating time-frame for all 17 plants. "The events in Japan were so extraordinary that I believe it must have an impact on Germany's attitude to nuclear power," she said.
The government had already announced a three-month shutdown of Germany's seven oldest reactors - representing 7GW of capacity - after the initial near-meltdown at Fukushima. Officially, the move was to allow enough time for two independent inquiries into German nuclear safety standards. But the mid-March shutdown also came before key regional elections.
The concession was not enough to prevent a Green victory in federal state elections in Baden-Wurttemburg later that month. The shock defeat for her CDU party in Germany's most prosperous state convinced Merkel to abandon large chunks of last year's agreement with her pro-nuclear liberal partners. That deal would have added an average 12 years to the working lives of Germany's nuclear plants.
The seven reactors taken offline last month (plus an eighth nuclear plant in Mecklenburg already offline for repairs since 2009) will now be decommissioned. Just four of Germany's nuclear reactors are expected to remain online through May.
RWE had already started a legal challenge against the state of Hesse over the temporary closure of its Biblis A and Biblis B plants.
The move would hit profits by "a low three-digit million-euro figure", RWE chairman Jurgen Grossmann told shareholders at the group's AGM.
"German nuclear plants meet all existing safety standards, otherwise they would already be offline. The events in Japan don't change that," he insisted.
Nuclear advocates point out that six of the world's ten most efficient reactors are in Germany. However, Grossmann faces strong opposition to his pro-nuclear stance - even on RWE's advisory board.
No other utility has yet joined RWE in the courts. However, all four national suppliers have stopped making payments into the new renewables fund. Set up last year to promote investment in new renewable technologies, the fund is effectively a tax on the higher profits made from nuclear plants' extended working lives.
The industry insists the €1.4 billion a year transfers must end now the government has reneged on its part of the deal. "It's clear there is no longer any legal basis for these payments now that the German government and federal states have abandoned the nuclear policy that went with them," said an Eon spokesman.
Unsurprisingly finance minister Wolfgang Schauble insists the industry remains contractually obliged to pay - €300 million is due this year. And Schauble is already studying ways to make up the future tax shortfall under this revised nuclear phase-out scheme. One option is to increase the new nuclear fuels tax - already set to bring in over €2 billion a year from generators.
The utility sector is not united in opposition to Merkel's new line. Leading German energy and water lobby BDEW supports a return to the nuclear phase-out deadlines of her first coalition government.
In comments criticised by both Eon and RWE, BDEW president Hildegard Mueller backed the government's nuclear rethink and its latest exit date. The Federal Cartel Office has also welcomed the move. The authority warned last autumn that keeping nuclear reactors online longer would strengthen the market power of RWE, Eon, Vattenfall Europe and EnBW.
Meanwhile, Italy has also performed a U-turn on nuclear power in the wake of Fukushima. The Italian government has put on indefinite hold plans to introduce a new generation of nuclear reactors in Italy. Opinion polls suggested Italian voters would reject prime minister Silvio Berlusconi's nuclear project in a referendum forced on the government by Italy's Constitutional Court.
Here too the nuclear reverse implies a much bigger role for gas-fired generation. The retreat also undermines Enel's co-operation deal with EDF - the third-generation plants were to be developed in co-operation with France.
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