Germany's Nuclear Companies to Stop Renewable Fund Payments

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--The German government's plan to fund a surge in renewable energy growth through a new nuclear tax that is worth billions of euros looks set to fail, according to reports.

Germany's four main operators of nuclear power plants, RWE AG (OTC:RWEOY), E.ON AG (OTC:EONGY), Energie Baden-Württemberg AG (ETR:EBK) (EnBW), and Vattenfall AB (Stockholm, Sweden) have reportedly stopped paying into the renewable energy fund, which was part of the deal when the government controversially decided last year to extend the lives of its older nuclear power plants. For additional information, see November 2, 2010, article - German Parliament Backs Extending Lives of Nuclear Power Plants.

The companies operate 17 nuclear reactors, which traditionally provided about 25% of the country's electricity. However, everything has changed recently, with the government forcing them to close the seven oldest plants last month following the ongoing problems at Japan's Fukushima Daiichi nuclear plant. Despite the temporary nature of the closure, it is widely believed that those plants will never reopen, reducing their contribution by 6%, or 8,300 megawatts (MW). For additional information, see March 28, 2011, article - German Nuclear Plants Begin Shutdowns.

The four operators were expected to pay €2.3 billion ($3.4 billion) a year for six years in what was called the "nuclear fuel-rod tax." Additionally, the companies agreed to pay €1.4 billion euros each over that period into a renewable energy fund that would help fund clean energy projects. The companies have recently told the government, according to documents seen by Germany's Spiegel Online, that they are ceasing payments to the renewable energy fund. In addition, the closing of seven nuclear plants will severely reduce the amount the government will get from its fuel-rod tax.

Germany's U-turn on energy policy in the wake of events at Fukushima is set have a major impact on the country's energy landscape. The government is expected to address the issue of withdrawing from nuclear power much faster than previously expected in the coming weeks, which will mean an increased emphasis on renewable energy projects, as well as the development of carbon capture and storage (CCS) technologies.

The government has signalled that it plans to build 10,000 MW of offshore wind capacity in the next nine years. That figure is up from just a few hundred megawatts in 2010. For additional information, see April 21, 2011, article - Germany Turns to Wind as Nuclear Sector Loses Appeal. By 2020, Germany is aiming to have 55,000 MW of total wind energy capacity, which will be capable of supplying approximately 25% of the electricity demand, up from 7.5% today.

Germany's CCS development lags behind other European nations, thanks to a lack of government support, but that is all changing now as nuclear power loses its appeal. Last month, the government drafted a bill to support CCS projects, in an effort to speed up the development of large demonstration projects. It also will improve their chances of winning vital European Union funding. An early exit from nuclear power means fossil-fuel powered plants using CCS will be needed to fill the energy gap. For additional information, see April 18, 2011, article - Germany Turns to Carbon Storage Following Japanese Nuclear Disaster.

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