30 may 2011

Germany to scrap nuclear power by 2022

By Gerrit Wiesmann in Berlin Financial Times May 30 2011

Germany will phase out the nuclear power plants that produce a quarter of its electricity over the next decade, the ruling coalition decided on Monday in a reaction to the problems at Japan’s Fukushima plant after the March earthquake and tsunami.

In a high-risk move meant to put Germany at the forefront of the conversion to renewable energy, the government will switch off eight of its 17 nuclear plants this year and close the other nine by 2022.

But it will not abolish a nuclear fuel-rod tax, introduced this year, as the speedy closure of the first group of plants should reduce the power generators’ annual tax bill from €2.3bn ($3.29bn) to €1.3bn, officials said.

The decision by Angela Merkel’s Christian Democrats and their coalition partner the Free Democrats will come as a blow to Germany’s “big four” nuclear power companies, RWE, Eon, Vattenfall and EnBW.

It could not only dent earnings this year, but also reduce their capacity to invest in new projects to realise the government goal of doubling renewable energy to 35 per cent of electricity production over 10 years.

Ms Merkel, chancellor, shocked the big four power companies when she ordered a rethink of her hitherto pro-nuclear policy in the wake of the Fukushima meltdown.

She ordered the seven oldest plants off stream for a safety check – an eighth was already down for repairs – and pledged changes to a nuclear phase out, which she had extended to 2036 from 2022 late last year.

To hasten the building of new generation facilities, transmission lines, and pump storage, Berlin plans to streamline planning laws – much as public projects were fostered after reunification in the 90s.

To guard against power shortages, one or two of the old plants to be closed this year will remain on stand by as a reserve over the winter, and three of the newest nuclear plants will remain on standby from 2021 to 2022.

The opposition Social Democrats and Greens, whose support Ms Merkel wants to win for Germany’s newly accelerated nuclear phase out, criticised this last decision as politically difficult and technically unworkable.

But with Ms Merkel aiming for a formal cabinet decision at the start of June and final parliamentary approval a month later, she and the opposition have a few weeks to iron out wrinkles in what was agreed overnight.

When in government 10 years ago, Social Democrats and Greens agreed Germany’s first – and highly popular – nuclear phase out. Ms Merkel’s prolongation of this original 2022 deadline proved highly divisive last year.

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