BY KELVIN ROSS
The financial impact of Germany’s nuclear phase out is now being felt in the boardrooms of the country’s energy companies. But it will be a case of no pain, no gain, for its future energy mix.
|The head of RWE, Volker Beckers, recently told a conference in London that the German government had a “romantic view of energy” because of its decision to withdraw from nuclear power.|
|Volker Beckers: the boss of RWE saw his company’s profits plunge because of Germany’s nuclear decision|
Now the impact of that ‘romantic’ strategy is being felt in the boardrooms of German companies, notably energy giants RWE and E.ON.
Both suffered a significant profits drop in the third quarter – E.ON’s slipping 64 per cent and RWE’s falling 46 per cent. RWE CEO Juergen Grossmann acknowledged that “the coming years will be difficult for us”, while E.ON’s chief financial officer Marcus Schenck said the company will seek damages in court for losses linked to the nuclear exit.
Ever since it took the nuclear decision in June, Angela Merkel’s government has maintained that renewables will take up the slack in the country’s future energy mix, and with Germany already one of the wind power world leaders, it is better placed than most to take that gamble.
But a gamble it nevertheless is. Germany prides itself on its domestic manufacturing prowess, and in turn its position as one of the world’s exporting heavyweights. The undoubted increase in energy costs that will come with a shift to renewables will add to exporting costs. Not good news for any industry in the current economic climate, particularly in the Eurozone.
Yet the country is firmly set on this course. Last month Germany’s environment minister Norbert Roettgen said that “renewable energy and energy efficiency are the two pillars of the new energy policy” and the government has said that its renewables share of the energy mix must rise from the current 17 per cent to 35 per cent by 2020 and 80 per cent by 2050.
Professor John Schellnhuber is one of the world’s most influential climate scientists. He also happens to be the current energy adviser to Angela Merkel and he maintains that the world’s energy system could be transformed to a cleaner and cheaper renewable model for the same money already spent in fossil fuel subsidies.
“Renewables are by definition inexhaustable, so do not lead to the piling up of debts,” he said in an interview this month. “They are also evenly spread: the wind is blowing almost everywhere, the sun is shining almost everywhere. In the end, renewables are the quintessential democratic energy source.”
He also said those countries maintaining a steady course towards new nuclear – and he singled out the UK – were chasing the “myth” that nuclear is low cost. “If you factor in all the costs including nuclear waste treatment or dismantling a nuclear plant, it is the most expensive energy source.”
Critically, Germany’s energy stance has the backing of public opinion. A recent survey found 79 per cent of Germans polled thought that increased energy tariffs were “reasonable”, with only 15 per cent feeling they were too high.
The eyes of governments and the energy world – particularly players in nuclear and renewables – will be fixed on Germany in the coming years. Because if its blueprint for change works, it will set a pattern that will feed out to the rest of the world.
New research suggests that by 2020, half of the global spend on renewables will come from markets outside the EU, US, Canada and China, with the Middle East, Africa and Latin America having projected growth rates of 10–18 per year between now and then.
According to the World Nuclear Association, there are some 432 nuclear reactors operating in world, with another 63 being built and 502 at the planning stage. That’s a multi-trillion juggernaut that this time last year was hitting the fast lane. Now the events at Fukushima have caused it to shift down a gear. The road it takes in the future could be following signposts written in German.
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