Germany's Nuclear Power Predicament

A couple of months after Japan's earthquake-tsunami-nuclear disaster, Germany made headlines by announcing plans to pull the plug on its dependence on nuclear energy. The country said that eight plants would go dark immediately, and that the remaining nine would be shuttered by 2022.

The Fukushima crisis in March was enough to tip the political scales away from a policy that has long divided Germans. (See: What Nuclear Loses, Green Gains.)

That decision has had some strange, if not downright ironic, consequences for Europe's economic powerhouse. Nuclear energy accounted for about 28 percent of Germany's power, according to some reports. That's a pretty hefty amount to replace. There were, of course, promises for alternative sources -- the idea of generating more wind power from farms in the North and Baltic seas has some folks incredibly excited -- and calls to reduce electricity use with more energy-efficient buildings, homes, and machinery.

But what is Germany doing, at least for now? It's purchasing atomic power from its neighbors, particularly France and the Czech Republic. And it's extending export credit guarantees for the construction of nuclear facilities in "politically and economically important" countries like Brazil.

Yeah, that made me go hmmmm, too. How can you halt a nuclear energy plan for concerns about potential hazards in one breath and then support other countries that generate power this way in another? But what's the alternative?

I'd be remiss if I didn't touch on the cost of decommissioning plants and moving energy production elsewhere. Obviously, there are immediate direct costs associated with taking a functioning operation and hitting the giant "Stop" button, but what caught my eye are the soft costs, like the lawsuits that follow when lots of people's livelihood is suddenly yanked from under them, along with the cost of future power generation from other plants.

This report from the World Nuclear Association has some shocking stats about the financial rut Germany may face if the phaseout continues. Though it's in the association's interest to paint this kind of picture (it is the World Nuclear Association), the following sentences grabbed my attention:

The country's four nuclear power utilities are pressing claims for compensation and in particular are suing the government over continuing with the nuclear tax introduced in relation to the 8- and 14-year licence [sic] extensions agreed in September 2010. Claims for compensation will be on the basis of write-down of plants, cancelled upgrades which were in train following the September 2010 policy change, and decommissioning costs brought forward... The German government appears to be facing claims of over EUR 10 billion[$13.3 billion]...
In September 2011, a study from KfW Bankegruppe, which supports domestic developments, said that about €25 billion per year will be required to meet the government's nuclear phase-out goals. It puts the total investment at €239-262 [billion] by 2020. This includes up to €10 billion on fossil fuel plant, €144 billion on renewables plant and up to €29 billion on 3600 km of high-voltage transmission lines. The bank noted that large capital-intensive projects have a tendency to go over budget.

There are some other longer-term issues being hinted at, as well -- like the probability of Germany missing its 2020 greenhouse-gas reduction targets without nuclear energy. You can't get more ironic than that.

Personally, I applaud Germany for going this route. The world -- IMHO, FWIW (in my humble opinion, for what it's worth) -- should be innovative enough to come up with cleaner, greener ways of satisfying its insatiable demand for energy.

But I'm also keen enough to weigh the pros and cons of decisions like this. Shutting down one plant out of potential fear (and, yes, potentially devastating and fatal consequences when things go terribly wrong) and replacing it with utilities that choke any progress on legitimate green efforts doesn't make any sense. It's sort of like robbing Peter to pay Paul, or however that saying goes.

What's true, too, for Germany (and for Europe as a whole) is that you cannot have it both ways. People, companies, and factories need power, and power has to come from somewhere. But where?

In my next blog, we'll go beyond Germany and look at the UK's plan, Switzerland's nuclear phaseout, some other interesting energy projects happening elsewhere in Europe, and what's at stake for the high-tech sector.