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Shutting Down the Nuclear Power Plants: Electricity Supply in Germany Remains Secure – Dismantling and Disposal Pose Major Challenges

Press Release of June 5, 2015

DIW Berlin’s energy experts argue for a public-law nuclear fund – nuclear power plant operators’ provisions for dismantling and atomic waste disposal are not enough

Even by the end of 2022, after the very last German nuclear power plant has been removed from the grid, the lights in this country will not go out: The electricity supply remains secure, as DIW Berlin’s calculations attest to. “In Germany, we are already producing far more electricity than we are using,” explained Claudia Kemfert, Head of the Department of Energy, Transportation, and Environment at DIW Berlin. “The impending shutdown of the Grafenrheinfeld nuclear power plant will hardly change that. In 2025, we’ll still have enough electricity and will in fact continue to export to other countries.” Even bigger challenges lie ahead with regard to the dismantling of the nuclear power plants and the disposal of high-level radioactive waste, according to energy experts Kemfert, Christian von Hirschhausen, and Cornelia Ziehm: The provisions that have been set up by the nuclear power plant operators for these tasks, which currently amount to roughly 38 billion EUR, are not enough. Furthermore, because the provisions are not protected against insolvency and the energy companies could shirk their responsibilities through corporate restructurings, the study’s authors propose the creation of a public-law fund into which the provisions for dismantling and final disposal can be transferred. For the additional costs that are expected, the authors suggest that legislators set up a reserve liability.

German Institute for Economic Research (DIW Berlin)

The German Institute for Economic Research (DIW Berlin) is one of the leading economic research institutions in Germany. Its core mandates are applied economic research and economic policy advice as well as provision of research infrastructure. As an independent non-profit institution, DIW Berlin is committed to serving the common good. The institute was founded in 1925 as Institut für Konjunkturforschung (Institute for economic cycle research). Since 1982, the Research Infrastructure SOEP (German Socio-Economic Panel Study), a long-term study, is affiliated to DIW Berlin. The institute has been headquartered in Berlin since its founding. As a member of the Leibniz Society, DIW Berlin is predominantly publicly funded.

Shutdown of the Grafenrheinfeld nuclear power plant is of little consequence

When the nuclear power plant in the Bavarian municipality of Grafenrheinfeld is taken off the grid in June 2015, the impact on the energy economy will be minor. The majority of the ten terawatt hours of electricity that have been produced annually until now will be compensated for by Germany’s coal and lignite power plants, as well as natural gas power plants. After 2022, as well, the electricity supply will be sufficient; only in peak hours is Germany likely to be dependent on electricity imports from neighboring countries. DIW Berlin’s calculations show only a slight increase in electricity prices.

The real challenges—the dismantling of deactivated nuclear power plants and the disposal of nuclear waste—still lie ahead, according to the DIW study: A repository in which the highly radioactive fuel elements could be safely stored for thousands of years is not yet in sight. According to current plans, the final location for a repository is expected to be selected by 2031 at the very earliest. The not-very-reliable cost estimates for decommissioning and disposal stand at least 50 to 70 billion euros; consequently, the provisions set up by the power plant operators, which currently amount to 38 billion EUR, are nowhere near enough.

Nuclear companies’ provisions subject to numerous risks

The nuclear power plant operators regularly redirect the provisions they have set up to their respective parent companies, as stipulated by the Atomic Energy Act. Thus, a relatively convenient financing source is available to the energy companies. At the same time, it is questionable what the provisions will be worth in a few years, given the recent upheavals in the energy market and the declining profitability of some utilities. "In light of these major risks, the provisions of nuclear companies should be promptly transferred to a public fund," said von Hirschhausen. DIW Berlin’s energy experts also believe that with regard to the foreseeable additional requirements, the energy companies should also be required to make up the difference for the existing provisions.