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What Will a Nuclear-Free Germany Cost?

Merkel’s plan to exchange nuclear reactors for offshore wind farms and a stronger grid could cost more than expected.

German Chancellor Angela Merkel this week released a detailed proposal to close all of Germany’s 17 nuclear reactors by 2022. Merkel promises an orderly transition to replace nuclear power, which accounts for nearly one-quarter of the country’s supply, with renewable power. But opposition from reactor operators could inflate the cost of that transition.

Power swap: Chancellor Merkel proposes to shut down nuclear power plants, such as this 806-megawatt reactor at Brunsbüttel on Germany’s North Sea coast. The primary replacement: farms of wind turbines, such as the 5-megawatt model at Brunsbüttel.

The construction of new reactors in various countries has slowed in the wake of Japan’s Fukushima nuclear accident, but Merkel’s plan would make Germany the first to scrap nuclear altogether.

The proposal could have a number of impacts on Germany’s energy supply. Federal Economics Minister Philipp Rösler has estimated that the plan would raise power costs to German consumers by roughly one cent per kilowatt-hour, which translates to an annual increase of roughly 35 to 40 Euros ($50 to $57) per household. But Rösler’s modest price tag assumes that the government will defray the cost of building offshore wind farms—currently Germany’s smallest power source—to provide one-fifth of generation within two decades.

Blackouts are a near-term concern because, under Merkel’s plan, Germany’s eight oldest reactors—seven of which she ordered offline for safety inspections in March, and another undergoing maintenance—would never run again, and ramping up supply from other sources could prove difficult. Germany’s Federal Network Agency has determined that southern Germany, which stands to lose five reactors producing 5,200 megawatts, could run short of power this winter. During cold snaps, demand for power is at a peak, and output from Germany’s more than 17,000 megawatts’ worth of solar capacity is also at a minimum. Electricity imports are also harder to come by during the winter, as neighboring countries confront their own power peaks.

Merkel’s plan seeks to counter the blackout threat over the next two years by keeping some of the shuttered reactors in “cold reserve,” ready to be restarted in a pinch. For the longer term, it proposes a doubling of renewable power generation, from 17 percent now to 35 percent of supply by 2020, and power grid expansions to share that power around the country. “We need an entirely new architecture for our energy system,” Merkel acknowledged on Monday in a statement distributed by Germany’s embassies.

Work to accelerate grid expansion started earlier this year with legislation authorizing pilot tests of high-voltage underground power cables. Merkel’s new plan, which she hopes the parliament will approve this summer, simplifies the permitting process for transmission and provides compensation to affected communities.

Opposition from Germany’s nuclear power companies could set back the government’s plans, however. The companies may petition the courts to block collection of a new nuclear-fuel tax that the government expected would provide 2.3 billion Euros per year to underwrite new wind farms. Even if the tax survives legal challenge, the eight reactors already shut down will trim revenues by about one billion Euros, according to Germany’s finance ministry. Courts could also order compensation for the companies that own the silenced reactors, further reducing the government’s freedom of action to support renewables.

E.ON AG, Europe’s top power generator and operator of six German reactors, said in a statement Tuesday that it considers the nuclear fuel tax “unlawful” and that it would seek compensation for stranded investments in its reactors: “E.ON accepts the will of the political majority to secure an early phase-out of nuclear energy. At the same time the company expects to receive due compensation for the financial damages associated with these decisions, which is expected to amount to billions of Euros.”

Andreas Kraemer, director of the Berlin- and Washington-based Ecologic Institute, is hopeful that Germany will take greater advantage of energy conservation options and rely on more distributed forms of renewable power generation that consume waste and biomass. However, Germany could also end up relying more heavily on coal-fired power, which provided 43 percent of electrical generation in 2010.

Germany may also import more energy from France, as long as public opinion there enables nuclear reactors in France to continue churning out surplus power.

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