DPA
Workers dismantle elements of the decommissioned Lubmin
nuclear power plant in the state of Mecklenburg-Western Pomerania in
this 2013 archive photo.
Fearing astronomical cost
overruns, German utility companies want to shift responsibility for
dismantling nuclear power plants to the government. Despite the billions
of euros in risks it entails, the proposal could still prove attractive
for Berlin.
Germany's latest problem weighs 275,000 tons. That's the cumulative
weight of the steel and cement scrap that will come out of the
dismantling of the Obrigheim nuclear power plant, which is located in
the town of the same name in the southern German state of
Baden-Württemberg. That scrap includes pipelines, plant sections,
turbines, generators and the reactor pressure vessel. It also includes
10,000 tons of potentially radioactive material that will have to be
submerged in an ultrasonic bath or processed with a sandblaster to
reduce its radioactivity. The most dangerous work will be conducted by
remote-controlled robots.
The demolition of a nuclear power plant is a technically complicated
undertaking that can take between 15 and 20 years to complete. In the
case of Obrigheim, dismantling the power plant will cost energy utility
company EnBW, which owns the facility, an estimated €500 million ($684
million). Compared to other plants in Germany, this pressurized-water
reactor is relatively small. The dismantling of larger plants like
Gundremmingen B or Isar 2 in the state of Bavaria are estimated to cost
as much as €1 billion each.
Most Germans have assumed that these costs will be picked up by the
energy utility companies, which have gleaned billions of euros in
profits from these plants. Besides, why should different rules apply to
nuclear plant operators than to normal car owners, who have to pay to
scrap their car when it's no longer fit for the road?
But the heads of Germany's three major electric utility companies -- E.On CEO Johannes Teyssen, RWE chief Peter Terium and EnBW head Frank Mastiaux -- have come up with what they think is a brilliant plan to transfer the billions in risks related to dismantling nuclear plants. They want to punt responsibility to the state and taxpayers.
Public Trust
The energy executives are proposing the energy industry equivalent of a "bad bank" to transfer their biggest risk: nuclear power plants.
Following the Fukushima nuclear disaster in March 2011, German Chancellor Angela Merkel introduced her Energiewende, or energy turn-around, policy of phasing out all nuclear energy and shifting largely to renewable energies by 2022. After closing the plants, the next step is for them to be dismantled. Fearing significant risks inherent to that task, industry executives would like to transfer ownership of existing nuclear plants into a public trust that would operate the plants until their closure around eight years from now. The trust would be responsible for dismantling the plants, which is estimated to cost billions, and also for storing radioactive waste.
The bad bank for nuclear power plants would belong to the
government. According to the plan, electric utility companies would
contribute around €30 billion in reserves, which the government required
them to build up over the years in order to cover the future costs of
dismantling the plants and storing nuclear waste. The government, in
turn, would assume responsibility for all the risks that currently
reside with the utility companies.
None of the companies involved agreed to provide a response to SPIEGEL.
RWE chief Terium and E.on boss Teyssen informed the government about the general outline of their project early this year. Now details of the plan have been further honed and energy executives, if they have their way, they will soon enter into negotiations with the government.
At the heart of the matter are risks that, at least for now, are impossible for the companies or the government to estimate in any reliable manner. What is clear is that it is unlikely that the €30 billion in reserves that have been set aside by the companies will be sufficient to handle the task.
Important Questions Remain Unanswered
For one thing, the cost of dismantling atomic power plants is often greater than anticipated. And one of the most pressing questions -- where to safely store radioactive waste -- still hasn't been answered in Germany even after a half-century of producing nuclear power in the country.
A review on the safety of the main site for storing waste in Germany, the salt dome in Gorleben in the state of Lower Saxony, is still ongoing, even 30 years after use of it commenced, and a suitable permanent storage facility has yet to exist, even though the utility companies have already spent €1.6 billion for this purpose. Last year, the German government made the decision to also search for suitable storage sites in other states, with the aim of finding a permanent storage facility by 2031. The estimated cost of exploring a single possible storage site is more than €1 billion.
As Germans have learned in recent years, though, costs can quickly explode for major public works projects -- Berlin's unopened new airport or Hamburg's Elbphilharmonie concert hall, for example. But if you think those are complicated construction projects, try building a permanent storage facility where nuclear waste can be safely stored for thousands of years. It is impossible to predict in advance what an enormously complicated undertaking like that would cost -- €10, €20 or €30 billion? That's why the utility companies would like to see that responsibility carried by the government.
Confirmation of the Anti-Nuclear Movement
In many respects, the company's plan seems to definitively confirm that the Anti-Nuclear Movement of the 1970s and 1980s, with its mass protests, was correct in its main assertions. After the Chernobyl disaster in 1986 and the Fukushima catastrophe in 2011, it is no longer possible to claim that atomic power is a safe and fully controllable technology. And no legitimate solution has been found for the problem of storing or eliminating nuclear waste. Now, on top of all that, come the full economic disclosures.
The government subsidized nuclear power at the time of its introduction, just as it now lends a state hand in the development of wind and solar energy. Depending on which estimate you go by, somewhere between €17 and €80 billion in taxpayer money has been funneled into nuclear energy. Once the reactors began successfully producing electricity, the profits landed in the coffers of the energy utility companies and their shareholders. Now that the end is approaching for the technology in Germany, the state is expected to assume the risks again.
So far, German Economics and Energy Minister Sigmar Gabriel of the center-left Social Democrats (SPD) has dodged official talks on the issue. A few weeks ago, he cancelled a meeting with the heads of E.on and RWE at an industry event at the last minute. The reason given at the time was that Gabriel wants to first wrap up reforms to Germany's Renewable Energy Act (EEG), the core of the country's transition from nuclear power to renewables.
Government Also Faces Major Risks
Its possible Gabriel won't be able to postpone discussion of the controversial issue for long, because what at first glance might look like a crude attempt by the utility companies to cheaply rid themselves of their radioactive legacies is actually more complicated. It could, in fact, be in the government's interest to take up the companies' offer to negotiate. It's not just E.on, RWE, EnBW and Vattenfall who have lots at stake over the nuclear issue -- the government in Berlin also faces considerable risks.
The energy producers are asking for about €15 billion in compensation from the government in several lawsuits. Because the Merkel government decided on a swift exit from nuclear power after the Fukushima disaster, E.on and RWE are bringing their complaints to the German Constitutional Court. At issue is whether the government's decision represented an illegal invasion of the companies' property rights. The sector is expecting the first verdicts in early 2015. The outcome, legal experts say, is hard to predict.
Vattenfall is also asking an arbitration court in Washington for about €3 billion in compensation for the early closure of the Krümmel and Brunsbüttel nuclear reactors. The Energy Charter Treaty allows a foreign company like Vattenfall to turn to American courts, and the German government needs to abide by the verdict, even if it is decided in Washington.
Things aren't looking good for the Nuclear Fuel Tax introduced by
Finance Minister Wolfgang Schäuble (CDU) either. The tax has been
imposed since 2011 on uranium and plutonium used by power companies in
the generation of atomic energy in exchange for an extension of the
permitted lifespan of the nuclear plants. A few weeks ago, the Financial
Court in Hamburg ruled the tax to be unconstitutional. If the verdict
is upheld by the Constitutional Court and the European Court of Justice,
the EU's highest court, then Germany could be forced to pay up to €5
billion back to the companies. The government's goal of presenting a
balanced budget would then be almost impossible.
The energy companies have signaled to the German government that it
should include the damage suits in the negotiations. If the government
backs the founding of a nuclear bad bank, then company heads Teyssen and
Terium would be willing to call off some of their lawsuits or refrain
from demanding compensation.
The utility company executives don't see this offer as unmoral or as a threat and attempt to blackmail the government. If it's possible, the head of a corporation has an obligation to sue for the compensation of its stockholders, and if he or she wants to abandon such efforts, then the executive needs a reason.
ANZEIGE
But the heads of Germany's three major electric utility companies -- E.On CEO Johannes Teyssen, RWE chief Peter Terium and EnBW head Frank Mastiaux -- have come up with what they think is a brilliant plan to transfer the billions in risks related to dismantling nuclear plants. They want to punt responsibility to the state and taxpayers.
Public Trust
The energy executives are proposing the energy industry equivalent of a "bad bank" to transfer their biggest risk: nuclear power plants.
Following the Fukushima nuclear disaster in March 2011, German Chancellor Angela Merkel introduced her Energiewende, or energy turn-around, policy of phasing out all nuclear energy and shifting largely to renewable energies by 2022. After closing the plants, the next step is for them to be dismantled. Fearing significant risks inherent to that task, industry executives would like to transfer ownership of existing nuclear plants into a public trust that would operate the plants until their closure around eight years from now. The trust would be responsible for dismantling the plants, which is estimated to cost billions, and also for storing radioactive waste.
DER SPIEGEL
Graphic: Germany's Nuclear LegacyRWE chief Terium and E.on boss Teyssen informed the government about the general outline of their project early this year. Now details of the plan have been further honed and energy executives, if they have their way, they will soon enter into negotiations with the government.
At the heart of the matter are risks that, at least for now, are impossible for the companies or the government to estimate in any reliable manner. What is clear is that it is unlikely that the €30 billion in reserves that have been set aside by the companies will be sufficient to handle the task.
Important Questions Remain Unanswered
For one thing, the cost of dismantling atomic power plants is often greater than anticipated. And one of the most pressing questions -- where to safely store radioactive waste -- still hasn't been answered in Germany even after a half-century of producing nuclear power in the country.
A review on the safety of the main site for storing waste in Germany, the salt dome in Gorleben in the state of Lower Saxony, is still ongoing, even 30 years after use of it commenced, and a suitable permanent storage facility has yet to exist, even though the utility companies have already spent €1.6 billion for this purpose. Last year, the German government made the decision to also search for suitable storage sites in other states, with the aim of finding a permanent storage facility by 2031. The estimated cost of exploring a single possible storage site is more than €1 billion.
As Germans have learned in recent years, though, costs can quickly explode for major public works projects -- Berlin's unopened new airport or Hamburg's Elbphilharmonie concert hall, for example. But if you think those are complicated construction projects, try building a permanent storage facility where nuclear waste can be safely stored for thousands of years. It is impossible to predict in advance what an enormously complicated undertaking like that would cost -- €10, €20 or €30 billion? That's why the utility companies would like to see that responsibility carried by the government.
Confirmation of the Anti-Nuclear Movement
In many respects, the company's plan seems to definitively confirm that the Anti-Nuclear Movement of the 1970s and 1980s, with its mass protests, was correct in its main assertions. After the Chernobyl disaster in 1986 and the Fukushima catastrophe in 2011, it is no longer possible to claim that atomic power is a safe and fully controllable technology. And no legitimate solution has been found for the problem of storing or eliminating nuclear waste. Now, on top of all that, come the full economic disclosures.
The government subsidized nuclear power at the time of its introduction, just as it now lends a state hand in the development of wind and solar energy. Depending on which estimate you go by, somewhere between €17 and €80 billion in taxpayer money has been funneled into nuclear energy. Once the reactors began successfully producing electricity, the profits landed in the coffers of the energy utility companies and their shareholders. Now that the end is approaching for the technology in Germany, the state is expected to assume the risks again.
So far, German Economics and Energy Minister Sigmar Gabriel of the center-left Social Democrats (SPD) has dodged official talks on the issue. A few weeks ago, he cancelled a meeting with the heads of E.on and RWE at an industry event at the last minute. The reason given at the time was that Gabriel wants to first wrap up reforms to Germany's Renewable Energy Act (EEG), the core of the country's transition from nuclear power to renewables.
Government Also Faces Major Risks
Its possible Gabriel won't be able to postpone discussion of the controversial issue for long, because what at first glance might look like a crude attempt by the utility companies to cheaply rid themselves of their radioactive legacies is actually more complicated. It could, in fact, be in the government's interest to take up the companies' offer to negotiate. It's not just E.on, RWE, EnBW and Vattenfall who have lots at stake over the nuclear issue -- the government in Berlin also faces considerable risks.
The energy producers are asking for about €15 billion in compensation from the government in several lawsuits. Because the Merkel government decided on a swift exit from nuclear power after the Fukushima disaster, E.on and RWE are bringing their complaints to the German Constitutional Court. At issue is whether the government's decision represented an illegal invasion of the companies' property rights. The sector is expecting the first verdicts in early 2015. The outcome, legal experts say, is hard to predict.
Vattenfall is also asking an arbitration court in Washington for about €3 billion in compensation for the early closure of the Krümmel and Brunsbüttel nuclear reactors. The Energy Charter Treaty allows a foreign company like Vattenfall to turn to American courts, and the German government needs to abide by the verdict, even if it is decided in Washington.
The utility company executives don't see this offer as unmoral or as a threat and attempt to blackmail the government. If it's possible, the head of a corporation has an obligation to sue for the compensation of its stockholders, and if he or she wants to abandon such efforts, then the executive needs a reason.
- Part 1: Utilities Look to German Taxpayers
- Part 2: Little Time Left for Talks
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