Sunday, August 14, 2011

How Merkel Decided to End Nuclear Power - 
How did Germany, Europe’s economic powerhouse, turn its back on nuclear energy?

Most directly, the decision belonged to Chancellor Angela Merkel. Unlike other world leaders, she is a trained scientist, with a Ph.D. in physics.

She reached the momentous decision to phase out nuclear power by 2022 after discussing it one night over red wine with her husband, Joachim Sauer, a physicist and university professor, at their apartment in central Berlin.
Mrs. Merkel, her allies say, is ready to lead Germany into a new era in which wind and solar energy, along with enhanced efficiency, can be developed fast enough to replace the lost power from nuclear plants.
Ranged against this optimism are Germany’s big four power suppliers, a host of doubting analysts and economists who say that the government has failed to calculate the cost....

Economics Minister Philipp Rösler says switching off nuclear power will increase the cost of a kilowatt hour of electricity by just one euro cent. Mr. Röttgen calculates the cost per household during the transition as roughly one extra cup of coffee latte — €2.50 to €3, or about $3.50 to $4.25 — per month.

But the nuclear industry, led by E.ON, Vattenfall, RWE and EnBW, says that it will be the private sector, particularly energy companies, that will have to pay for the switch to renewables and other energy sources, like natural gas and even a dozen or so new coal plants. “We are not talking about peanuts here, but hundreds of billions of euros,” said Jürgen Grossmann, the chief executive of RWE.

On the other side of the equation, the government will no longer pay for nuclear subsidies, which, according to Greenpeace, have totaled about €200 billion, or about $285 billion, since West Germany began research and development of nuclear power in the 1950s. Subsidies last year totaled €4.1 billion, according to a recent study by Green Budget Germany (Forum Ökologisch-Soziale Marktwirtschaft), an independent environmental research organization.

Another factor is the likelihood that Germany, which already gets more than one third of its natural gas from Russia, will grow more dependent. Mrs. Merkel, however, disputed this point.... Germany imports nearly 60 percent of its energy, according to the International Energy Agency.

Renewable sources like wind and solar power currently make up only 17 percent of the power mix. The government envisions that amount roughly doubling by 2020 and reaching 80 percent by 2050.

It also plans vast expansion of the national grid to move electricity from the north coast, where wind is plentiful, and the south, where solar energy is more abundant, to the key industrial areas where it is most in demand. According to the German Energy Agency, 1,500 kilometers to 3,600 kilometers, or 930 miles to 2,200 miles, of new extra-high voltage power lines will have to be built by 2020, financed by grid operators.
Cost estimates vary widely, depending on the technology used, but the agency estimated basic overhead lines with standard transmission would cost €950 million a year over seven years. High voltage direct current transmission cost more than twice that.

Some big businesses are worried. Industrial production, which is generally energy intensive, accounts for 28 percent of the German economy, compared with 22 percent in the United States. The world’s leading chemicals company, BASF, uses as much natural gas in its factories as the entire city of Berlin. Germany already has high energy costs compared with elsewhere around the world, said Michael Grabicki, spokesman for BASF. “German industry,” he said, “has to remain competitive.”

By contrast, many of the Mittelstand, the small and medium family-owned companies that form the backbone of Germany’s economy, are excited at the prospect of developing new technology and perhaps breaking the monopoly of the four big energy companies.
The big energy companies are not taking the change lying down. In April, RWE filed a lawsuit against Mrs. Merkel’s interim decision to close seven of the oldest nuclear plants immediately.  Mr. Grossmann, the RWE chief, said Mrs. Merkel’s move would leave a shortfall of more than 100 terawatt hours of electricity, roughly 17 percent of the total consumption. He said that would have to be made up through imports from places like France and the Czech Republic, and by building new coal- or gas-fired plants, which, in contrast to nuclear power, produce global warming gases.

Claudia Kemfert, energy expert at the German Institute for Economic Research (DIW Berlin) and professor of energy and sustainability at the Hertie School of Governance in Berlin, said coal already accounted for 42 percent of Germany’s electricity needs....

The government acknowledges that natural gas and coal-fired power plants will continue to play a big role. They are, after all, able to provide large chunks of power at any time — unlike solar or wind energy, at least with current storage technology. The government, through the state-supported bank KfW, has set up a special €5 billion fund to support construction of offshore wind farms. It also intends to build storage facilities for renewable energy — yet another expense.

At the same time, German companies and households are being urged to increase efforts to save energy. Subsidies are planned over the next three years to help modernize housing stock and to wean the automobile industry... away from petroleum and to develop electric cars. 

Part of a series on Germany’s changing role in Europe and the world.
by Judy Dempsey
The New York Times
August 13, 2011

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