Wednesday, September 16, 2009

Italy advances, Germany falters, on nuclear energy futures

Two countries could not be further apart on splitting the atom

TugofWarOn September 27th German voters will go to the polls and decide the fate of 17 nuclear power plants and 25% of its electricity supply. While Germans are making this fateful energy policy decision, Italy is moving to build eight new nuclear reactors after earlier this year overturning a two-decade old ban on them. The differences between the two countries is stark. Even more to the point, the two countries could do a complete role reversal in terms of the price of power and where they get it.

Currently, Italy imports 80% of its natural gas, relies heavily on dirty coal plants, and has some of the highest prices for electricity in Europe. Germany has long since depreciated its nuclear power plants which are are now fat cash cows that help the nation preserve a significant degree of energy independence.

Role reversal in the wind

AngelemerkelIf the German electorate swing enough votes from Chancellor Andrea Merkel’s (right) party to challenger Foreign Minister Frank-Walter Steinmeier, and a splinter green party, the fate of the nukes will be sealed and they will be decommissioned by the end of the next decade.

This outcome will force Germany to import enormous amounts of natural gas (think energy density;– uranium v. methane) from Russia with all of the political baggage and risk that comes with the fuel. Additionally, German greens, who think renewables are the answer, will find they have brought an economic nightmare to German industry with electricity at 20-30 cents/KwHr and unreliable base load power. Germany will wind up with Italy’s energy crisis and the country will have done it all on its own.

Meanwhile, by the end of the next decade, Italy will have built two of four 1,600 MW Areva EPRs and three of four 1,200 MW Westinghouse AP1000s for a total of 11 GWe of power. The country will have removed forever plans to build massive coal fired power plants with their greenhouse gases and it will have significantly reduced its dependence on natural gas supplies.

German business groups want to keep the reactors

Frank-Walter SteinmeierWhile Chancellor Merkel is currently leading Minister Steinmeier (right) in the polls, business groups are nervous about the election. The major German utilities have all but halted new capital investment in the nation’s nuclear power plants holding their collective financial breath until the ballots come in.

Financial analysts say If Merkel wins, RWE and E.ON have promised substantial new construction, including uprates of existing plants and possible replacement of aging reactors, that would produce thousands of new jobs in a recession racked economy.

Martin Lueck, an economist at UBS,told Bloomberg wire service Aug 11 that keeping the reactors “would be good for equities.” Deutsche Bank analysts told World Nuclear News Aug 25 that Merkel would commit to a policy of “life extension” for nuclear energy which is the only way the nation will meet climate goals.

Christopher Kuplent of Credit Suisse told the Economist Sept 10 that keeping the existing plants will stabilize electricity prices. This is why Germany’s manufacturing center, which relies heavily on exports for earnings, wants to keep the plants. If the price of electricity soars, and power supplies become unreliable, exports will suffer.

Swings of public opinion?

22.06.2008, Germany, Goslar, Niedersachsen, Bundesumweltminister Sigmar Gabriel, Portraits, © Frank Ossenbrink, Reinhardtstr. 27 b, 10117 Berlin, Tel.: 030-28 09 79 00 oder 0172-400 65 05, Fax: 030-28 09 79 01, e-Mail:, Bankverbindung: Sparkasse Bonn, BLZ 380 500 00, Kto.-Nr.: 101 294 627,, Steuernummer 502/5221/1111 beim Finanzamt Bonn-InnenstadtPublic opinion in Germany is another matter. The Economist reported Aug 11 that Social Democrat Party (SDP) Sigmar Gabriel (left), who is the current ruling coalition’s environmental minister, has exploited unexpected nuclear plant shutdowns and problems at a waste dump to fan public fears about nuclear energy. He’s achieved some success too with less than a fifth of the electorate polled reported to be in favor of keeping the reactors after 2020.

For her part, if Ms. Merkel wins, she pledges to form a new coalition with the Free Democratic Party isolating the SDP and its anti-nuclear political agenda. In a debate last week with her opponent, Merkel argued that nuclear energy is needed as a “bridge” to reach climate goals, but was not specific about what’s on the other shore. Steinmeier made a series of pledges to create more jobs, but was no more specific about how to pay for them. Polls following the debate showed a split among voters with less than three percentage points between supporters of the two candidates.

While German voters consider how to cast their ballots, their neighbor to the south is voting with bond issues and commitments to funding a massive new nuclear build.

Italy launches new nuclear utility venture

HandshakeFrench and Italian utilities have formed a new, joint venture which will raise billions of dollars to fund eight new nuclear power stations. Italy’s Enel will team with France’s EDF to form Sviluppo Nucleare Italia which translates loosely as “we build nukes in Italy.”

To fund the venture, Enel will raise $14.3 billion and EDF will raise an additional $4.7 billion for a total of $19 billion to kick off construction of 11 GWe of nuclear power. At $3,000 Kw, that’s enough to pay for two EPRs and three AP1000s.

Italy’s second largest utility Edison sPa has committed to taking a 15-20% stake in the Enel/EDF joint venture. CEO Umberto Quadino told Reuters Sept 4 this would equal his firm’s national market share of Italian electricity customers which is about 17%.

The massive financial commitment comes less than a month following a change in Italian law that overturns a two decade ban on new nuclear power plants. By 2030 the country could generate up to 25% of its electricity from nuclear reactors.

Westinghouse deal set for Sept 29

ScajolaItalian Energy Minister Claudio Scajola (left) told Dow Jones wires Aug 25 he expects the first plants to break ground by 2013 and to be in revenue service by the end of that decade.

Westinghouse will build reactors in Italy through a joint venture with Ansaldo Nucleare. The deal will be sealed when Scajola attends an international economic summit to be held in Pittsburgh, PA, on Sept 29. EDF will build Areva EPRs similar to the units now under construction in Finland and France.

World Nuclear News reported Sept 7 that Ansaldo Nucleare has kept its workforce current on nuclear technology with recent completion of Romani’s Cernovada reactors.

In a paradox that surpasses the diametrically opposes nuclear futures of Italy and Germany, German utility E.on is said to be interested in participating in Italy’s new nuclear build.

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Rod Adams said...

Dan - Thanks for the details. I believe that RWE and E.on are involved in the UK's new nuclear build program. It is funny how the owners of the plants, who know best the technical challenges and costs, disagree with the assertions of some anti-nuclear campaigners that nuclear is "too expensive".

Michael Karnerfors said...

Would it be mean of me to say: hope the greens run... and really tip Germany over? Then the bullshit will finally be over.

Of course this is just frustration speaking but let's face it: Germany is already a cesspit when it comes to air pollution. They can't get much worse. To the worst case senario is not that much worse than it is today.

People are already waking up about Denmark, seeing how their wind power is giving them more coal-sourced emissions efter the neighbouring swedish nuclear powerplant Barseb├Ąck was closed.

Some pretty unflattering pictures about Spain are beginning to surface as well... the world's photovolitica industry are not exactly doing well in 2009 after the government started turning off the public grants tap.

And here is Germany... hailed by everyone as so utterly green despite burning coal, lignite and gas like few others. What would drive the point home more better than a spectacular failure of the German green miracle?

I wouldn't be so bad now would it? The UK is already going nuclear, as is Italy, India and China. We need an example of just how utterly airheaded the notion of renewables-only within 20 years is. And Germany might be able to provide us with that.

Again: this is frustration speaking. The little angel of my shoulder roots for Merkel and an end to the German nuclear moratorium.

But that just makes Germany a martyr in the eyes of the anti-nukes. So the little demon on the other shoulder says: let'em choke on it... then we won't have to listen to their belly-achin' any more.