Germany's Merkel approves nuclear reactor life extension 

German coalition agrees on future for Germany’s 17 nuclear plants

Angela Merkel’s (right) coalition government has finally agreed, after a two-year struggle, to a two-tier extension of the life spans of German nuclear power plants. The government plan now lays the groundwork for the country’s future energy policy set to be released as a policy document by the end of September. The immediate outcome is that Germany's 17 nuclear reactors will run 8-14 years longer than the 2020 deadline set by a prior government strongly influenced by the Green Party.

The environment minister, Norbert Röttgen, who opposes longer terms for the nuclear reactors, said after the meeting that the life spans of Germany's nuclear power stations would be extended by 12 years on average.

However, true to his views, he also said the decision might trigger a legal and political backlash. The agreement must now pass in the lower house of the German parliament. Opponents will try to bottle it up there or seek judicial review.

The agreement means:

• The effective lifetime of older nuclear units, built before 1980, will be extended from by eight years from 32 years to 40 years total lifecycle.
• The effective lifetime of newer nuclear units will be extended from by 14 years from 32 years to 46 years total life cycle.

Cost of life extension

The life extensions come with a whopper of a cost to E.ON and RWE, the two largest utilities. Nuclear power plant operators will have to pay a “fuel-element tax” of [eur] 2.3 billion ($2.9 billion) per year for 6 years to compensate for the windfall profits they make because of lifetime extensions. That's a total of $17.4 billion.

Also, the four nuclear utilities will have to pay a supplementary “eco-tax” of EUR 0.9 cents per kilowatt-hour. This will amount to an estimated [eur] 15 billion during the extended lifetime of Germany’s nuclear units.

The eco-tax is to be used as a subsidy for the construction and operation of renewable energy plants. Merkel has been pursuing a "renewable" fund for this purpose since 2008. Green groups rejected her idea at that time as a pro-quid-pro for reactor life extension.

Nuclear utilities will also continue to pay a so-called "voluntary contribution" of [eur] 300 million a year in 2011 and 2012 and EUR 200 million a year in 2014 to 2016 for the construction of renewable energy plants. They will pay more after 2016 when the windfall-profit tax will no longer be payable. The first six years will accumulate [eur] 1.2 billion.

A remarkable vision for renewables

Germany has a remarkable grip on an implausible political vision that most of its electricity can come from renewable energy technologies by 2050. Merkel's government has set a target for wind and solar power to supply 30% of electricity by 2020. That's some slide of the energy pie!

Because the 2050 objective is beyond the lifetimes of most adults living today, politicians making the promise will never be held accountable for failing to fulfill it.

Bloomberg News reported that Klaus Beil, energy spokesman for the Free Democrats, told the wire service:

"This is definitely a good result that makes good economic sense. Power will remain affordable while renewable energy will get a new kick start."

Actually, power is not very affordable in Germany which has the highest rates for electricity in the European Union after Italy and Denmark. Germany's nuclear reactors currently provide about 25% of the electricity used in that country.

According to the Deutsche Welle wire service, reactor life extension will result in significant new profits for the nuclear utilities despite the twin taxes on their operations.

"Apart from the unresolved security issues, the deal will mainly mean more profits for the utility companies involved," Felix Matthes from the Freiburg-based Ecology Research Institute told Deutsche Welle.

"According to our own calculations, these firms will be able to pocket an additional 95 billion euros in profits, with only 15 billion euros expected to go towards climate protection. So you can hardly talk about a push for renewable energy sources."

Opposition groups will try again next election

The main opposition parties, the Social Democrats and the Greens, oppose the proposals and have said they might challenge them in court. They have also said they would reverse the decision if they win power at the next general election in 2013. Social Democrats Signar Gabriel (right) and Greens' leader Claudia Roth said they plan to make the reactor life extension an election issue in 2013. They tried that tactic in 2009 and lost.

Renewable energy firms, which will benefit from the taxes imposed on nuclear utilities, complained about the deal.  Dietmar Schuetz, president of the German renewable energy agency issued a statement calling the deal a "farce." He blamed the "nuclear lobby" for the agreement. In fact, the nation's nuclear utilities have hotly opposed the new taxes and the renewable energy fund.

A spokesman for SMA Solar, a large German firm, told Reuters Sept 6 the extension of the life span of the 17 nuclear reactors "puts a damper" on investment in solar energy."

Until recently, Germany had generous subsidies for solar energy. Merkel's austerity budget is what's really putting a damper on their industry. A government spokesman said the removal of solar subsidies would make the industry more competitive.

Nuclear Still Needed In Germany, Says Expert Report

(NucNet) An expert report the German government commissioned to help plan the country’s future energy policy concludes that most of Germany’s energy demand can be met with renewable energy sources by 2050, but that nuclear is needed in the meantime.

Environment minister Norbert Röttgen and economics minister Rainer Brüderle, who jointly presented the findings of the report in Berlin, said the report argues for the longer use of nuclear energy to help in reaching these goals. The study says nuclear energy can be a “bridge technology”.

Eight possible scenarios for German energy policy are looked at in the report and compared with a reference scenario of continuing with Germany’s existing policy. The result depends – among other parameters – on how long the country’s 17 commercially operational nuclear units are allowed to continue operating.

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