Actual costs elusive in German nuclear phase-out

Deutsche Welle, Apr 21, 2011

Germany is phasing out its use of
nuclear power, but questions remain

Germany's plan to phase out nuclear power and expand renewable energy was brought back into the spotlight by Japan's nuclear meltdown. Estimates about what the plan will cost are highly politicized and vary widely.

Germany has been debating its reliance on nuclear energy for decades now, but the radioactive meltdown at Japan's Fukushima nuclear plant have triggered a temporary shut down of older reactors within its borders.

With those plants offline, Germany's national debate has turned to the matter of rising energy costs and the price of building a 'smart grid' to secure a renewable energy supply with.

On the marketplace of ideas, every price estimate seems up for grabs.

Difficult estimate

Not only do figures for restructuring the German energy grid vary widely, so do the amounts consumers are anticipated to bear.

Economic Minister Rainer Brüderle has said abandoning nuclear power could cost Germany from one to two billion euros per year, while an energy industry federation estimates the withdrawal of older nuclear plants alone will cost German consumers 3.5 billion euros per year.

Part of the problem is that many of the figures bandied about are tailored to political needs. Green party politicians cite a mild, 1.50 euro increase to the average monthly household electric bill. On the other hand, the publicly and privately financed German Energy Agency (Dena) estimates a price hike of about 20 percent.

Claudia Kemfert of the DIW says
renewable energy is a good long-term
investment

Claudia Kemfert, an energy market specialist at the taxpayer-funded German Institute of Economic Research (DIW) in Berlin, puts the figure in between: an additional 10 to 20 euros per month for a household of four.

Imported energy

According to Dena, about half of the cost increase will come from infrastructure expansions in order to supply 30 percent of the German market with renewable energy by 2020. The agency says the cost of converting and expanding electrical grids needs to be considered, while modernizing and constructing new fossil fuel plants is also expensive.

Green power currently meets 17 percent of Germany's needs. Until recently, nuclear accounted for about a quarter of total domestic energy production.

When the DIW did its calculations, offsets from competition on the EU market were factored in with the increased cost of German energy. Germany could buy cheaper power from neighbors like France, which is heavily dependent on nuclear and has no plans to change soon.

The actual cost

A recent Greenpeace Energy report asserts wind and water power are already less expensive energy sources than nuclear or coal. The report takes into account actual costs, government subsidies and external expenses.

Household electricity would be
more expensive without nuclear power

When the possibility of a nuclear accident is factored in, atomic energy costs about twice as much as hydropower, and two-thirds more than wind turbines. And there are "hidden costs" which don't show up on consumers' electric bills, because nuclear power is only possible thanks to some 186 billion euros in government investment since 1970, Greenpeace claims.

The Greenpeace study also points out that government support of nuclear energy is largely a thing of the past. "Sunk costs" were invested into nuclear in the 1970s and 1980s, but government investment in green energy has risen since the early 1990's, and now outstrips subsidies for all other forms of energy, according to the report.

Numbers in perspective

As the debate about what German industry and consumers will truly pay for renewable and nuclear-free energy rages on, the jungle of numbers continues to grow. Representatives of the nuclear and coal industries call the figures in Greenpeace's state subsidy study exaggerated.

Gerd Billen, president of the Federal Association of Consumer Centers, said he's trying to make sense of the situation.

"Everyone is trying to outdo themselves with regards to the costs of this energy restructuring," he told Deutsche Welle. "I believe there's no reliable basis for these high estimates. What we need is an honest reckoning."

Industry which make intense use of
energy need to be competitive
worldwide

An energy price increase of 20 percent would be a horrific scenario for Utz Tillmann, president of the Chemical Industry Association. His energy-intensive sector includes the chemical, metal and paper industries.

"Every single one of these branches is in international competition," he told Deutsche Welle. "It's important for us to discuss competitive prices at different locations."

Investment over time

Claudia Kemfert of the DIW indicates that Greenpeace's estimated atomic energy costs - including the uncertain costs of a nuclear disaster - is in the upper range of what she's familiar with. Without the disaster scenario, nuclear is still cheaper than renewable energy, she says.

But Olav Hohmeyer, of the German Advisory Council on the Environment, called Greenpeace's figures "quite solid."

"If you count the cost of disposal, nuclear can quickly reach very high costs. Coal is also burdened with high external costs through climate change," Hohmeyer said, adding that Greenpeace's study is on more solid footing than those which ignore the costs of energy consequences.

And the fact is that over time, energy investments pay off. "Renewable energy will be cheaper in the future," Kemfert asserts. She agrees that more scientific studies are needed to compare the costs of different forms of energy.

Who gets the bill?

A smart grid is needed to fully
utilize renewable energies

Without a doubt, the transition away from nuclear power will cost Germany. Aside from debate over the figures, the question about who will pay remains. And the government is already preparing taxpayers for the end of nuclear power; Environmental Minister Norbert Röttgen has said all Germans will have to invest in a new energy future.

Utilities could shoulder the burden, or a fuel tax increase might provide the needed kick. One problem is that utilities are likely to pass any new fees on to consumers. Some German utilities have already increased their electricity prices this year, citing the higher cost of green energy as justification.

Chancellor Angela Merkel assured the public in an April 16 video message that, in the long term, people won't have to pay more for electricity. And Greenpeace points out that an initial investment in renewable energy will eventually pay for itself.

Additionally, Germany's transition out of nuclear could act as a model for other countries.

"If a modern, industrialized country is able to shift away from nuclear, then other countries can too," Kemfert said.

Author: Sonya Angelica Diehn (Mathias Bölinger, Reuters, AFP, dpa)

Editor: Gerhard Schneibel

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