Steep Rise in Energy Costs Likely If All 17 Reactors Are Closed
This blog post is an update of my coverage published in Fuel Cycle Week V10:N426 May 26, 2011, by International Nuclear Associates, Washington, DC.
Shortly after the extent of the damage to reactors at Fukushima became apparent, German Chancellor Angela Merkel (right) announced she was reversing her policy of keeping the nation’s oldest reactors open beyond 2022. A deal put in place by her predecessor called for the eventual closure of all 17 reactors by that date.
She immediately closed the nation's eight oldest reactors initially for a 90-day review and then made the closure permanent. They represent 8,300 MW of power. The reactors being kept open represent 12,000 MW.
At a May 30 news conference, Ms. Merkel said her government was "reconsidering nuclear energy following the unimaginable disaster at Fukushima."
The reactors provide 23% of the nation's electricity supply. Merkel said the gap would be closed with investments in renewable technologies, energy efficiency, and power purchase agreements (fossil) with neighboring countries.
The government's ability to fund and build the wind towers and transmission lines faces several challenges. Merkel has imposed a tax on nuclear fuel, but closing eight of the nation's 17 reactors will cut the revenue in half. Also, German citizen groups oppose the wind farms, and the transmission lines, as visual eyesores.
Germany's utilities have long-term purchase agreements with Russia for natural gas tied to the price of oil. This makes this fossil resource volatile in terms of market movements and the Russians have a history of using their natural gas supplies for political leverage.
Merkel's decision to close the reactors is a restatement of an agreement inked in 2002 by a coalition government of Social Democrats and the Green Party. As Merkel was making her announcement, neighboring Switzerland said it would phase out its nuclear reactors after 2030.
There is no middle ground in the nuclear debate in Germany. Anti-nuclear sentiment in Germany runs high with polls showing as much as 70% of the population says "no thank you" to nuclear power. Huge demonstrations have supported election setbacks for Merkel's conservative coalition in recent regional elections.
Some sentiment among Green Party members calls for a reduction in Germany's industrial economy and a return to a life style of "off the grid" villages in natural ecosystems. It turns the concept of sustainability on its head.
A drive off a cliff
What's interesting about Merkel's U-turn is that it took place so quickly and without much consultation with her Conservative Party supporters. Merkel’s choice to close the reactors is a bid to stay in power and avoid losing her slim lead in parliament. The decision is so sudden that it has been compared to the movie “Thelma & Louise” where in the final scene two women, in flight from the law, choose to drive off a cliff rather than be captured.
In September 2009 Merkel swung for the fences and bet her election chances on keeping the reactors open. Her conservative coalition won by a slim margin. Business groups that represent the export driven manufacturing sector of Germany’s economy have called such actions “irresponsible” and a form of energy suicide.
Huge costs for closing the reactors
There are huge costs for closing the reactors. According to German business lobby BDI, the permanent closure of the reactors could raise electricity costs by 30% by 2020, or a wholesale price rise of 70 euros ($102) per megawatt hour . BDI said the “tax” of increased energy costs would reduce the competitiveness of German exports.
The 17 reactors represent 11% of all energy used in Germany. Since the reactors generate electricity, the sectors most affected will be heavy industrial machinery, commercial lighting, air conditioning, and home residential use.
The energy research institute r2b estimated in the study for BDI that if Germany shuts down all 17 reactors by the end of this decade, the cost for the average German household would be an increase of $200/year. The research group also predicted steep cost increases for electricity for the commercial sector.
The reason is the 17 reactors have long since been depreciated and, while they are cash cows for their owners, also sell their electricity at bargain rates. The replacement fossil and wind power will not be a bargain.
The 30% rise on electricity costs would result in additional payments to utilities for replacement fossil, wind, and solar power, and replacement nuclear power from other nations, of $46.4 billion of which $33.7 billion would be paid by commercial manufacturing and other industrial/business users. BDI also noted that Germany would fall short of being able to meeting its commitments to reduce CO2 emissions by generating an additional 282 million metric tons of it or 28% more than if the reactors stayed open.
When asked if they would accept these increases for the cost of electricity, fewer than 10% said they would accept an increase of more than $130/year which is well below the $200 figure bandied about by BDI.
Yet, Germany’s utilities and the business groups that belong to BDI also see the closure of the reactors as inevitable based on the fact that Germany, and its neighbor Austria, are home to the planet’s strongest political opposition to nuclear energy. A poll published by the Allensbach Institute in mid-April indicates 31% of respondents want all reactors closed within the next five years and another 37% want the same outcome by the end of this decade. The only question now is whether they are willing to pay for their ideological passion.
What About the Fuel Rod Tax?
Another cost of closing the reactors will be the need to spend an estimated $13 billion to build 2,240 miles of new transmission lines to integrate the variable power from wind and solar projects into the national grid. The estimate, which comes from German think tank DENA, is equal to total spending in Germany for electricity in 2008 according to utility RWE.
Finding the money to build the lines may be a problem. In exchange for allowing German reactors to operate beyond the original phase out conditions, in October 2010 Merkel imposed a special tax on the country’s four power firms to pay $3.3 billion a year into a new fund to finance generation of electricity by renewable energy technologies.
The fund could fail to launch if the first eight reactors, now in a 90-day shutdown, are removed permanently from the grid. RWE has already indicated it will sue the German government to end the tax since the reactors are being closed by fiat.
Even if the tax fund collects revenue from the nine reactors that might stay open, political opposition to new transmission lines is almost as ferocious as feelings about the reactors themselves.
Winding Up to Oppose Wind
In an April 11 report German news wire Spiegel Online reported that Germany’s opposition to wind power is well organized. The website windkraftgegner.de (wind power opponents), lists more than 70 protest campaigns.
According to some of them, the German government plans to replace its nuclear reactors with thousands of wind turbines and thousands of kilometers of high-voltage “monster masts” in a move that “will deface vast swathes of territory.” According to Der Spiegel, it seems that Germans, though determined to end nuclear energy, are gearing up to protest against its replacement.
Precipitous Loss of a Sector of Energy Supply
Nuclear energy provides approximately 23% of Germany’s electricity but coal provides 42% followed by natural gas at 14% with hydro, solar, and wind at 16% and all other 5%. According to the World Bank, in 2008 per capita electricity use in Germany was 7,150 kWh. On a scale compared to other nations, this is actually quite low. The average in the U.S. is nearly twice that number.
Yet there is substantial political pressure which appears to be driving Germany right over a cliff into a delusional chasm. Germany’s largest utilities, including RWE and E.ON, have repeatedly said a precipitous closure of the nation’s nuclear reactors will lead to electricity shortages and shift the nation from being a net exporter to a net importer of energy.
In fact, according to the International Energy Agency, Germany made the switch to being a net importer of energy in 2010. It is the second biggest importer of natural gas globally after Japan, and in the top ten for imports of oil and coal. The only reason Germany is a net exporter of electricity is its current fleet of reactors which rank the nation fifth on a global scale.Once they're closed that status will also end.
Ethics Commission weighs in
German Chancellor Merkel may have added an accelerant to the process of increasing the nation’s dependence on energy imports by appointing a so-called Ethics Commission headed by former conservative environmental minister Klaus Topfer. The 22 member commission, rather than buttressing Merkel’s position as expected, went the other direction. With a smattering of church and university leaders, and little business representation, the commission crafted an improbable vision of “off-the-grid” life in post nuclear Germany.
According to a leaked version of the 28-page report made available to the International Herald Tribune May 12, the 22-member panel said the withdrawal from nuclear power “could offer enormous technical, economic, and social opportunities.” It seems that magical thinking has taken root in Germany.
The apparent contradictions of closing the 17 nuclear reactors, while seeking to meet climate change goals, were glossed over by the commission which said it was “unacceptable” to fail to combat climate change. In a remarkable example of turning a blind eye to reality, the commission also said it did not advocate rationing electricity in the event of shortages. Instead, the commission called for huge reductions in the use of energy as a way of taking the loss of the reactors into account.
According to the European Nuclear Society, Germany’s 17 reactors represent 11% of total energy used in all economic sectors in 2009. It follows that the Ethics Commission call for a major reductions in energy use in the nation goes far beyond the reactors and seeks to address more fundamental issues of sustainability far beyond anything previously contemplated by a western industrialized nation.
Ministry Tries Rear Guard Action
These alarming recommendations, and their potential consequences, are not lost on the current environmental minister Norbert Roettgen. In a report from a reactor safety commission chartered after the Fukushima accident, Roettgen argued against a sudden retreat from nuclear energy. He said the decision to close the reactors should be based on a “thorough assessment.” The environmental minister said the nation’s eight oldest reactors are safe and should not be removed from the grid. However, the panel also noted the reactors don’t have the protection of newer units against airplane crashes.
Roettgen, who belongs to Merkel’s Christian Democratic Union, has been a mercurial figure in the reactor debate, defending the safety of the fleet while calling for closure of all 17 units by 2022.
It is unclear whether common sense about energy security has any hope of taking root in Germany despite Roetten’s defense. The end result is that the Green Party and the Social Democrats may force the nation into a terribly bad choice. While they briefly hold power, once the lights go out, and the electric bills soar into the stratosphere, the only question will be how fast the closed reactors can be re-started.
German Stupidity Is Czech Opportunity
CEZ, Government Plan Three New Reactors at Temelin
Czech utility CEZ will move ahead with the sometime fitful Temelin project. Prime Minister Petr Necas said the government will drive the country’s nuclear energy development plans that include construction of up to three new reactors at the Temelin site and possibly two more at a new location.
The contracts to build the five reactors, worth an estimated $25 billion in new construction activity, are being vigorously pursued by France’s AREVA, Russia’s Atomstroyexport, and Japan’s Toshiba (Westinghouse).
Release of technical documentation to support bids has been delayed several times, but CEZ CEO Martin Roman said May 10 the bid process will be re-started with the release of the documents next October. A decision by the state-controlled utility to select a winner would be expected in 2013. The new reactors could be running and selling electricity to Germany by the time that nation’s 17 units close in 2022.
The rise of the Temelin project as Germany prepares to close its reactor seems to be another example of nuclear colonialism. The way it works is that a nation bans the construction of new reactors, but cheerfully buys power from them when they located across the border.
For instance, in the U.S. anti-nuclear fervor has banned new reactor construction in California for more than three decades, but throughout this period the state’s consumers have bought power from the Palo Verde site in Arizona.
Cities like Los Angeles are expected to negotiate power purchase agreements with a new reactor complex planned to be built in Utah. It replaces a 900 MW coal fired plant that the City of Los Angeles pulled out of over concerns about greenhouse gases.
The co-chairman of Germany’s Ethics Commission for Atomic Energy, Matthias Kleiner, seems to understand this. He warned in a radio interview via Welt Online April 4, “It would not win anything, if we turn off our nuclear power plants faster, but for nuclear import electricity from abroad.”
U.K.: Full Steam Ahead -
British Maintain Push for New Reactors, Meet Climate Goals
A key government official has issued a report that sets aside fears of a nuclear accident like the one at Fukushima occurring in the U.K. As a result, Mike Weightman, chief inspector of nuclear installations, has given a green light to construction of new reactors in that nation.
Energy secretary Chis Huhne told wire services, “We want to see new nuclear as part of a low carbon energy mix . . . the Chief Nuclear Inspector’s report reassures me we can.”
At the same time, Huhne released new carbon reduction targets for the U.K. which put it far ahead of other European Union countries. He committed the government to cutting greenhouse gas emissions in half by 2027. In a concession to industry, he added what he called a “rip cord” that would review the targets in 2014 if they proved too onerous to meet in terms of the cost of compliance.
Carbon taxes are intended to promote energy efficiency and also force market shifts from fossil to non carbon emitting energy sources including nuclear.
Weightman, who is also leading the IAEA safety review of the Fukushima accident, told the U.K. government that safeguards being used by the current fleet of reactors should prevent even remote risks. He said neither a 9.0 Richter scale earthquake nor a tsunami are credible for the U.K.
In all the report makes more than two-dozen recommendations which consider issues such as local flooding and loss of external electrical power. None of the existing fleet of U.K. reactors are BWR designs like those at Fukushima. All the current reactors in the U.K. are PWRs or gas cooled units. Both of the new reactors in design review are PWRs. They are the 1,100 MW Westinghouse AP1000 and AREVA’s giant 1,600 MW EPR.
The U.K. has identified 12 reactors at seven sites where it will build approximately 18 GWe of new nuclear powered electric generating capacity.
# # #