Maybe they want a better offer than $56 billion?
German Chancellor Andrea Merkel and her conservative Christian Democrats (CDU), think they have a plan to save Germany's nuclear power plants from being shut down. It is to extend their life by diverting some of the profits from the sale of electricity into a fund to buy down the higher costs of wind and solar power. The plan would generate euro 40 billion (US $56 billion) over a period of 20 years.
However, Social Democrat Environment Minister Sigmar Gabriel, speaking for a broad coalition that include the country's green groups, rejected the plan calling it "a return of the nuclear industry." The greens may want a better offer or the initial rejection may be just a negotiation ploy. Either way, it shows just how contentious things are. Even when really big money is on the table, the greens are sticking to their principles at least for now.
Reuters and the Financial Times of London report that the plan is an effort to stop an effort to close 17 nuclear power plants by 2021 which supply one-third of Germany's electricity. The paradoxical outcome of that plan, which is pushed by the greens, would be to require Germany to build more coal-fired plants with the accompanying release of greenhouse gases. It would also expose Germany to increased reliance on politically fragile supplies of natural gas from Russia. Green groups, which appear to be fixated on reducing consumption of electricity, have argued that wind and solar energy are all that is needed once the nuclear plants are shut down.
The battle over the future of these nuclear power plants will be at the heart of the federal elections in Germany which take place in September 2009. If you think South Africa has a problem with its GNP going in the ditch with brownouts from the lack of electricity, wait until you see Europe's largest economy take a tumble if the greens get their way. It's a battle for political power and the greens have staked out a position that is fundamentally hostile to nuclear energy under any arrangement. Their plan is dumber than a box of rocks, and that's being kind.
Merkel's point man on saving the nukes
Germany's minister of economics and technology, Michael Glos, is the point man for Merkel's drive to save the nuclear power plants and Germany's economy. Last week he told World Nuclear News, "there is no way out of coal and a lifetime extension of nuclear energy."
He pointed out that when the plan to phase out the nuclear plants was crafted the price of oil was $28/barrel. Now it is $110/barrel. He told WNN,
"Longer lives for existing nuclear power plants mean a long-term, lower-priced, safe and climate-friendly power generation. It would be simple and inexpensive to extend the lives of nuclear power plants."
However, he drew the line at building new nuclear power plants saying that was not on the table. What the CDU is putting forward, according to Reuters, is a concrete proposal to take some of the earnings from the country's current nuclear plants and pay for above-market rates for solar and wind power. Reuters reports that the main companies operating the nuclear plants, E.ON, RWE, Vattenfall, and EnBW, have agreed in principle to participate in the plan in return for keeping the nuclear plants open.
Privatize the grid?
While all this was going on, one of the big utilities, Vattenfall, told Reuters, it is thinking of selling off its transmission and distribution network. The issue of privatizing the grid, which could affect the price of renewables, has a lot of challenges, The firm's CEO Lars Goran Josefsson said,
"First we've got to see if there are respectable investors, which will invest long-term in the grid, and second whether there's a decent price. There are plenty of interested parties, including private equity companies."
He added the creation of an independent national grid company, bringing together all main power companies' networks, would be difficult. One of the reasons he's considering the plan is that a recent court ruling in Germany determined that the firm overcharged for use of its grid by euro 50 million (US $76 million) and that the money must be paid back. This appears to be a regulatory issue over rate-of-return.
Josefsson also endorsed the idea of buying renewable energy with profits from nuclear power plants. Reuters reported Josefsson told Berlin's Tagesspiegel newspaper that his firm would consider investing more in renewable energy if it were allowed to run its German nuclear power stations for longer.
"We can discuss this. But it has to be market-oriented ... any restriction to energy markets makes things more expensive for customers."
Goran is an advisor to Chancellor Merkel on climate change issues, so his move may be another signal about how she plans to tackle energy issues in the upcoming election. Without putting too fine a point on it, every electricity transmission and distribution network in Germany would benefit from having an extra $56 billion in renewable energy over the next two decades to sell to customers. The country's GNP would benefit from having that energy available to it.
Political pressures will drive the nuclear decision
The CDU plan is not likely to be implemented during Merkel's current term, but it is grist for the political mill. More likely, it will be the centerpiece of her government's drive to insure the country does not run out of electricity or energy.
Merkel has one other problem, one Germany shares with other European nations. It is how to achieve more independence from supplies of natural gas from Russia. The Russian bear has flexed its energy muscles in policy disputes with its immediate neighbors turning off supplies when it feels it is not getting its way on the international front. It would be in Russia's interests for Germany to shut down its nuclear reactors and have to buy more natural gas for peak power.
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Watch this space. The future of Germany's economy and Europe's depends on what happens to those nuclear power plants. That's what's at stake.
On the net
- World Nuclear Org - Nuclear power in Germany
Prior coverage on this blog
- Merkel swings for the fences to preserve nuclear plants
- A tectonic shift in Germany's nuclear energy politics
- Europe's G8 giants divided over nuclear energy
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