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Germany

Germany

Europe: Change may trigger nuclear showdown

German reactor phase-out amended.

A planned change in German nuclear power policy has set alarm bells ringing, with warnings that future development of the wind industry is now under threat. "The substantial offshore wind station projects are especially threatened," says Hans-Josef Fell, energy expert for Germany's opposition Green Party and a member of the federal parliament.

The country's long-standing nuclear phase-out law is being amended to allow an extension of reactor running times, Chancellor Angela Merkel of the centre-right CDU party confirmed. The announcement came at the end of election day in Germany, September 27, when the new federal government was confirmed - a coalition of the CDU; its right-wing Bavarian sister party, the CSU; and the liberal FDP.

Nuclear can be a "bridging technology" for a certain, undefined period of time because, says Merkel, "today, climate friendly and reasonably priced alternatives are not sufficiently available". Nuclear is a "transitional technology" until renewables can generate electricity around the clock in sufficient volumes or coal power stations are equipped with effective carbon capture and storage technology, the FDP adds.

Instead of the step-by-step phase-out by 2023 of Germany's 17 nuclear plants, totalling 20.5 GW, lifetimes are being extended. For how long, and for which plants, is still to be decided, but Fell says it is bad news because the additional electricity generation from nuclear will leave less space in the market for wind.

Giants to gain

Moreover, many of Germany's planned offshore wind stations are owned by the country's four big energy giants: E.on, RWE, EnBW and Vattenfall Europe, the same companies that own Germany's nuclear plants. Under existing arrangements, building and operating their offshore wind station projects, which have must-run status and, as such, are kept online in preference to other types of plant whenever energy supply exceeds demand, could squeeze out their nuclear generation. Being allowed to keep the reactors online means that they can consolidate their massive market power for years and rake in billions they had not banked on, says Fell. He fears they will delay planned offshore wind development to do so.

Assuming an average electricity price of EUR55/MWh and production costs for the (largely written-off) reactors of EUR22/MWh, E.on could gain EUR8.3 billion if allowed to run its reactors for an extra ten years, RWE EUR6.1 billion and EnBW EUR3.8 billion, according to a study by Landesbank Baden-Wurttemberg institutional equity research. It gives no estimates for Vattenfall Europe because of a lack of available data from the Swedish state-owned company.

Meanwhile, both the CDU/CSU and FDP have talked in the past of reducing the guaranteed payment rate for wind-generated electricity, Fell notes, although he concedes they may not follow through on that. But, he adds, much depends on who takes the post of federal environment minister. The federal environment ministry currently has responsibility for renewable energy and nuclear reactor safety, while the federal economy ministry looks after fossil fuels and the energy networks.

Others are less worried. "I don't think the new government will make much difference for wind energy," says Thorsten Herdan, managing director of the power systems division of Germany's engineering industry association, Verband Deutscher Maschinen-und Anlagen (VDMA). Representing power station builders including wind turbine manufacturers, he adds: "We're talking about nuclear lifetime extensions, not new build. Only one type of fuel will be affected by the nuclear lifetime extensions and that is coal." He believes that planned new coal stations are unlikely to be built.

Herdan points out that both the CDU/CSU and the FDP back renewables and, since an amendment of the renewable energy law took effect only last January, the new government is likely to focus first on other areas like tricky health and tax reforms. The FDP is, he adds, "fanatical" about offshore wind so much so that, he says: "We have to stress onshore developments must not be neglected. If there is a problem with the new government and wind energy, this is it."

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