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Inside a nuclear power plant
Once a nuclear plant is built it is relatively cheap to operateImage: picture alliance/dpa

Atomic economics

September 3, 2010

With Berlin scheduled to unveil a new energy concept, power companies have been lobbying for the extended use of their nuclear plants, if only for 10 to 15 more years. They could recoup their investments and then some.


When the German government unveils its new energy concept September 28, it will likely announce a plan to prolong the life span of the country's 17 existing nuclear power plants. Chancellor Angela Merkel has advocated doing so by another 10 to 15 years, saying that would make it possible for the country to control electricity prices and meet goals for greenhouse gas emissions.

But critics say an aggressive nuclear energy lobby has been pushing for such extended life spans so that power companies can continue to reap profits from their investments in nuclear reactors. Four companies operate nuclear power plants in Germany: E.ON, RWE, Vattenfall and EnBW.

Those companies hardly make a secret of their intentions, saying that extending the life span of Germany's nuclear power plants is good for the country's economy as a whole.

Returns on investments

Protesters against nuclear energy
Nuclear energy has no shortage of opponentsImage: AP

Take the Muelheim-Kaerlich nuclear reactor RWE built near the city of Koblenz, for example. After a test period of two years and 100 days of regular service, it was shut down because it had been built in an earthquake-prone area. The debacle was one of RWE's biggest blunders and surely intensified pressure on the company to profit from already-existing nuclear power plants.

Juergen Grossmann, chairman of the board at RWE, told Deutsche Welle that electricity would become more expensive if nuclear power plants were shut off immediately.

"It would get more expensive if nuclear power is turned off, because it would require many more expensive energy carriers to take over the portion of nuclear power," he said.

In addition to inexpensive electricity, prolonging the lifespan of nuclear power plants could create 7,000 construction jobs, as the environment minister wants all reactors to be fitted with additional concrete shells to protect against possible airplane crashes. Independent appraisers believe longer life spans could contribute to economic growth of 0.6 percent through 2050 and create 100,000 jobs.

Existing nuclear plants profitable

A salt mine tunnel near Gorleben
Nuclear waste is stored underground near the city of GorlebenImage: DW

Hans-Peter Wodniok, an analyst with the independent research company Fairesearch in Frankfurt, said nuclear power plants can be extremely profitable once the initial overhead costs are bridged.

"One has to pay for the necessary fuel elements and other expenses like personnel and security and so on," Wodniok told Deutsche Welle. "But one has no further consumption of capital, no further interest to pay on these nuclear power plants."

"Naturally, a significantly higher profit comes out of the equation," he said, adding that higher profits would mean higher tax revenues for the state in the wake of the financial crisis.

Still a gamble

Nevertheless, companies operating nuclear power plants are still faced with a gamble. Sinking electricity rates could drop by as much as 0.7 cents per kilowatt hour if the life span of nuclear power plants is extended by 12 years, and a tax on nuclear fuel would likely be introduced.

"I don't believe that the electricity providers will ultimately shoulder these taxes, but that the consumers of electricity will, at least in the case of private households," Wodniok said.

A solar park in Germany
Does Germany really have the renewable energy infrastructure it needs?Image: AP

With so many uncertain factors in the equation, the ultimate cost-benefit of extending the life span of nuclear power plants is hard to determine, according to Steffen Tolzien, an economist with the Commerzbank.

"It can't yet be conclusively answered," he said. "We still have to see what happens on September 28... It's also so vague. It wouldn't be serious to point out who the winners and the losers will be now, because there are many, many more varied interests that still need to be accounted for."

Author: Michael Braun/gps
Editor: Sam Edmonds

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