E.ON Shutting Grafenrheinfeld Nuclear Plant Early

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland) - Germany's largest energy company, E.ON AG (PINK:EONGY) (Dusseldorf, Germany), is to shut the Grafenrheinfeld nuclear power plant in Bavaria seven months earlier than expected because of the Government's controversial nuclear fuel tax.

The company has confirmed that the 1,275-megawatt (MW) plant, which is located 2 kilometres to the south of Grafenrheinfeld in the rural district of Schweinfurt, will now shut in May 2015 instead of December 2015. It supplies around 14% of Bavaria's total electricity and much of its base load power, leading to concerns over the power stability for the southern German region.

The fuel tax is charged on every gram of uranium or plutonium used in a reactor core. Grafenrheinfeld is due for refuelling in May 2015 but E.ON has decided that the short period of operation until its closure in December next year is not worth the effort.

"E.ON intends to stop the power operation of the nuclear power plant Grafenrheinfeld in Bavaria in late May 2015 and thus terminate seven months before the statutory maturity," the company stated. "The continued operation of nuclear power plants is economically only viable with a sufficiently long period without nuclear fuel tax. This tax does not expire until 2016. Therefore, the early decommissioning is inevitable and in the best interests of the shareholders of the company, given the shortened operational term for Grafenrheinfeld."

The fuel tax on nuclear plant operators was brought in as part of the conditions for extending the lives of older nuclear plants. However, shortly after the Fukushima nuclear accident in Japan in 2011, Germany's government pulled a u-turn on nuclear power and ordered the immediate closure of its oldest plants and then vowed to exit the nuclear power sector completely within the coming decade. Despite this, the government is still demanding the payment of the fuel tax which has led to huge financial impacts for operators and a series on ongoing legal battles. For additional information, see November 16, 2011, article - Nuclear Exit Hits German Energy Giants.

Grid operator, TenneT TSO BV (Arnhem, Netherlands), assured Bavaria that the early closure will not affect supplies but admitted that ensuring grid stability will be a much greater task.

Martin Fuchs, CEO of TenneT, explained. "For us as a transmission system operator the situation will require significantly increased intervention in the market to stabilise the grid and bring it under control".

TenneT said that is already intervenes around 1,000 times a year in order to keep the high voltage grid stable, with much of this related to instructing conventional power plants to reduce or increase their power to balance the grid. The cost of intervention currently stands at about €150 million ($207 million) a year, which is borne mostly by consumers. The early shutdown of Grafenrheinfeld will lead to more interventions and a sharp rise in these costs, the company warned.

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