Nuclear energy – fighting for a future

Dr. Klaus J. Kasper,

Chairman,

EnBW Kraftwerke AG

As a result of the establishment of the common market in Europe, electricity has become a commodity like any other for which pricing has become a decisive factor. And with deregulation of the electricity industry in Europe underway, acting and thinking in a market-oriented way and on a short term basis has begun to replace traditional long term planning with fixed concepts.

Currently in Germany there is enough electricity generating capacity available to meet the country`s needs, and with increased competition, the market is likely to become a buyer`s market characterised by low prices for all consumers. But this is only likely to be the case if nuclear power continues to play a significant role after liberalization.

The EU directive of 19 February 1997 required the European Union member states to implement electricity deregulation within two years. The directive has been implemented in varying ways by the different member states, and was adopted by German national law on 29 April 1998 without threshold values and transition periods, i.e. complete deregulation has been undertaken.

In Germany, the law on deregulation includes regulations concerning the granting of access to networks and multiple publication of access charges. However, certain issues such as the German law on power supply (Stromeinspeisungsgesetz), cross-subsidization of municipal utilities, combined heat and power generation and the rules regarding lignite fired power plants are problematic.

Nuclear issues

In a liberalized market, the specific costs for nuclear power plants, including high fixed costs, long depreciation periods and long annual operating times, can make nuclear power a burden. However, nuclear power has no `special status` in Europe and there are no efforts to change this under competition.

The outlook for nuclear power in Germany under competition is therefore uncertain due to its long-term costs. However, it has been a good way to procure electricity for some of the German Länder, especially the southern Länder which are far away from other energy carriers. These areas therefore wish to continue using existing nuclear power plants in the future.

Nuclear energy, like other energy carriers, therefore faces many challenges under a common liberalized market. As a result, many cost reduction programmes – for the plants as well as for the disposal of nuclear waste – have now been drawn up by utilities. Security questions also have top priority. In addition, nuclear utilities have realised that it is important to be cost conscious in more general areas, such as the cost-intensive ultimate waste disposal. The responsibility for this particular issue rests with the national government, which yet has to clarify its position on this.

In addition to these challenges, the nuclear industry in Germany also has to face the unfavourable policies of the federal government. These issues have been well-publicised, and will have a major impact on the German energy industry as well as on the country`s economy as a whole.

The government`s intention of phasing out the use of nuclear energy will make the operation of nuclear power plants more difficult. For example, for a period of almost nine months, there has been no transport of fuel elements. More importantly for the long term, phasing out nuclear power sooner than it is economically possible will lead to a considerable destruction of capital. This will harm Germany as a location for business due to higher energy costs and the reduction of highly qualified personnel in this sector.

The environment question

In terms of CO2 emissions, the construction of new combined cycle power plants and coal-fired power plants will result in higher CO2 emissions. The declared aims of Germany`s federal government and its agreements at Kyoto and Buenos Aires regarding the reduction of emissions cannot be reached without nuclear energy.

Without the use of nuclear energy, an additional 170 million t of CO2 emissions would be produced in Germany. In addition, if Germany`s nuclear plants were replaced by combined cycle power plants, the demand for natural gas would rise drastically to the equivalent of about two-thirds of the natural gas gathered in Norway in 1997. Such a rise in demand would have severe consequences on the availability and price of gas.

Further issues that have to be considered when phasing out nuclear power include:

• Phasing out nuclear power does not mean that there will be no nuclear energy in Germany. Our neighbours will continue to operate nuclear plants and will export this power to Germany.

• German utility companies will be forced to go abroad if they want to participate in new developments in the field of nuclear energy, especially to keep their expertise up to date.

• The German nuclear industry will cease to play a role in the improvement of nuclear security, especially in Eastern Europe

• An end to nuclear energy in Germany would change the prospect for low energy prices for consumers.

So far, German nuclear power plants have been recognised as being among the safest in the world; this fact is proven by the number of reportings on security-relevant occurrences as well as by the availability statistics.

Proponents of the federal government`s proposal to phase out nuclear power believe that renewable energy could compensate for the shortfall in capacity, but this would not be feasible. Although renewable energy sources will be used more and more in the future, they cannot take on the bulk of energy supply in Germany due to a number of limitations.

The potential for hydroelectric power has been almost exhausted in Germany and also in Europe. Germany already has significant wind energy capacity: in 1998 there was an increase of about 950 MW to more than 3000 MW. This, however, is only due to the German law on power supply. Nevertheless, in 1998, wind energy made up only about one per cent of the total energy resources.

Today, setting up new wind turbines in Germany is hindered by the protests of residents and environmental organizations. Furthermore, wind energy has a limited potential with the exception of offshore turbines. And since the generation of a specific amount of this kind of energy cannot be guaranteed, no thermal power station could be completely replaced.

Photovoltaic energy is generally not competitive in Germany. Aside from the economic aspects of this technology, it is also the climatic and geographic conditions which limit a wide use of solar energy. Therefore it cannot significantly contribute to energy supplies in the country.

Taxing times

The federal government has also proposed an `ecological tax`. This tax, as far as the phase-out of nuclear energy is concerned, does not really deserve to be called “ecological”. It is above all a levy of cash resources for other budget purposes, and will further restrict Germany`s nuclear utilities in overcoming its new challenges.

Result: The phase-out of nuclear energy will, among other things, lead to an increased dependency on energy import in Germany, to a destruction of capital and to a weakening of Germany`s position as an attractive business location.

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