Germany likely to phase out the nuclear phase out

Feb 17, 2010 - Datamonitor - Energy Central

Germany's Atomic Exit Law of 2001 is back on the political agenda. Given coal's poor environmental profile and the expensive and intermittent reality of renewable energy, concerns have been raised over whether Germany can afford to phase-out nuclear power generation and still keep the lights on and meet ambitious emissions reductions targets.

At present, nuclear power provides a quarter of Germany's electricity supply. Despite major renewable capacity additions, if the planned phase-out of nuclear power generation goes ahead, Germany faces a total potential shortfall of 12,000MW of power generating capacity by 2020. One concern is that, if energy prices rise in response to the lack of supply, German de-industrialization could accelerate as energy-intensive industries relocate abroad. In practice, the German government has few options at its disposal to offset the loss of baseload nuclear power generation; these include building more coal or gas-fired plants, expanding renewable energy capacity, or reversing or slowing the phase-out of nuclear.

Germany has committed to 40% emissions reductions by 2020. This will require significant investment in renewable energy, in which major strides have been made. Indeed, solar and wind power now account for about 15% of German electricity production. However, at current costs, these are unlikely to provide enough capacity to reverse the country's dependence on coal, which provides half of its electricity needs. As previously reported by Datamonitor, carbon capture and storage (CCS) is the only technology option currently available that could allow abundant, flexible and entrenched fossil fuels to continue to be used in power generation without exacerbating climate change. However, given that utility-scale CCS power technologies are not expected to be ready before 2020, this is not a viable solution to Germany's more immediate energy shortfall.

Because German nuclear plants were built in the late 1970s and 80s, infrastructure and capital costs have largely been depreciated. Therefore, the extension of plant life-spans could see plant owners garner more than E1 million a day in additional profits per plant. Current proposals being put forward by the government would see approximately 50% of these profits funneled into renewables. This would allow nuclear power generation to act as a 'bridging' technology to a low-carbon economy, and would calm fears over energy supply shortfalls.

However, it is still unclear whether nuclear power will be used as an interim measure until Germany's power demand can be met by renewables. Any changes to Germany's nuclear policy will be decided in the autumn, when the government coalition will discuss its energy policy. Datamonitor believes it is becoming increasingly likely that Chancellor Merkel's government will be successful in phasing out the phase out.