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RWE quits nuclear and puts all fossil fuel plants on hold

German utility RWE (RWE.XE) has today permanently withdrawn from building nuclear power plants and has also put on hold any plans for new fossil-fuelled projects.

The company’s chief executive designate Peter Terium told journalists that the company is pulling out of nuclear because “the financial risk is no longer acceptable and is unreasonable for our shareholders”.

RWE, which operates nuclear reactors in Germany and owns a stake in the Netherlands’ only atomic power plant, has already withdrawn from the Horizon project in the UK, a new nuclear joint venture with E.ON.

Today’s nuclear decision is not altogether surprising, coming in the wake of the Merkel government’s policy to step away from nuclear power, which hit the pockets of Germany’s nuclear operators, including RWE.

However, the plan to suspend until further notice any fossil-fuelled power plants is unexpected. Terium, who will take over as chief executive next month, said that decision was taken because of uncertainty over the German energy policy.

He said the freeze will stay in place until there is some clarity on the future of Germany’s energy regulatory framework. Further investment depends on the “future market design”, he added.

Germany’s energy policy – or Energiewende as it has become known – has increasingly come under fire from domestic players in the power market.

Last week at POWER-GEN Europe in Cologne, Bernhard Fischer, chief executive of E.ON Generation, said “no expert was asked and no risk assessment was done” prior to the government decision to withdraw from nuclear power.

He said that in the last decade, Germany had tried to be a “pacemaker in the world”, yet after Fukushima, “everything that had been achieved” regarding the life extentions of the country’s nuclear fleet had been “undone”.

And he said all that was achieved by the policy was that “politicians proved that they could make a decision… and the public appreciated this”.

Fischer said the German energy policy was not “technically impossible” but to achieve its aims it needed “co-ordination, co-ordination, and co-ordination” as well as “time, money and acceptance”.

Without this, he said the policy “was just a vision” and wondered if it was a vision in which Germany’s power sector would be able to survive.

Also at POWER-GEN Europe, the German U-turn on nuclear was branded a “sad and disappointing kneejerk reaction” by David Powell of GE and a “disaster” by Martin Giesen, chief executive of Advanced Power, who added: “We are destroying economic value. This is shutting down growth and in business, we live by growth. The Energiewende is an enormously expensive process. We are a very rich country, but if we stay on this road we will not stay rich for very long.”

Thorsten Herden, managing director of German engineering federation VDMA, stressed that he believed the decision was “irreversible” and added that his organisation was not consulted at all before it was made.