Nuclear phaseout costs may hurt Germany’s green ambitions


Germany may have to slow down its planned transformation to green energy, Environment Minister Peter Altmaier said in an effort to assuage worries that consumers will bear the brunt of the immense costs of the switch from nuclear.

A year before an election, fears of rising energy bills in Europe's biggest economy have become a major concern for Chancellor Angela Merkel's centre-right government which has ambitious targets for renewables to replace atomic power.

Thanks in part to a law that guarantees renewables above-market rates, Germany has seen a rapid expansion in solar panels and wind turbines. With about 25% of German power already derived from green sources, experts say it is well on track to hit its 2020 goal of 35%.

"If we keep up the current tempo, we will soon have a surplus of energy which will have to be reduced," Altmaier told the Financial Times Deutschland  on yesterday (28 August). "That would serve no one."

Altmaier said the rapid and expensive expansion of green power was causing high costs for consumers, who end up footing at least some of the bill, and putting strains on the grid. "These are costs that can be avoided with good planning."

The German unit of Swedish energy group Vattenfall said on Monday consumers may end up paying up to 30% more by 2020 to pay for the switch which will require investments of about €150 billion.

Some members of Merkel's government want a new law which would reduce the burden on consumers who have a fee added to their power bills to help fund the switch to renewables.

Economy Minister Philipp Rösler, leader of the pro-business Free Democrats (FDP) junior coalition partner, wants a major reform of the law before the 2013 election. Altmaier, a conservative, agrees a rethink is needed but not immediately.

"It is a very complex subject, so we need time," Altmaier told the newspaper, adding a major reform stood no chance of being passed by parliament for the time being.

'Unacceptable' comments

A senior opposition Social Democrat, Ulrich Kelber, criticised Altmaier's comments, saying: "It is completely unacceptable to slow the expansion of renewable energy."

Kelber said the government had failed to present a coherent plan to upgrade the power grid which would help expansion of offshore wind power, seen as a key renewable energy source.

The uproar over prices in Germany – which has the second-highest power prices in Europe – has intensified before a decision in October on whether to raise the fee paid by consumers.

Merkel has vowed to keep the 2012 charge to consumers at 3.6 cents a kilowatt hour stable in coming years. However, most experts believe the fee will rise to more than 5 cents in 2013.

Such a jump would mean most households would pay an extra €70 on an average annual power bill of 900. They already pay 150 for green power.

Fuelling resentment among some voters is an exemption granted to power-intensive industry, crucial for Germany's big manufacturing sector, which lobbied hard for relief, saying higher bills would put firms' competitiveness at risk.

If Merkel's government does decide to scale back the transformation due to concerns about the costs to the consumer, the offshore wind sector could be the main victim.

Progress in the sector, originally seen as one of the main sources for green power, has been slow due to higher than expected costs and regulatory questions which have deterred investors. Merkel's cabinet is expected today to approve a draft law designed to help the expansion of offshore wind parks.

In May 2011, Germany announced that it would shut all its nuclear reactors by 2022, following the Fukushima nuclear disaster in Japan.

Eight of Germany's oldest 17 nuclear reactors were permanently shut soon afterwards and another six are slated to be taken offline by 2021.

The remaining three reactors, Germany's newest, will stay open for another year until 2022 as a safety buffer to ensure no disruption to power supply.

Just two months previously, Chancellor Merkel had taken an unpopular decision to extend the life of ageing nuclear stations in Germany. But facing widespread public hostility to the energy source after Fukushima, she back-tracked.

Before the phase-out decision, Germany got 23% of its power from nuclear plants.

  • 29 Aug.: Chancellor Angela Merkel's cabinet is expected to approve a draft law designed to help the expansion of offshore wind farms.

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