European climate protection goals can be reached without nuclear power

Photovoltaics and wind power can replace nuclear power – DIW Berlin’s energy experts maintain that a nuclear power renaissance is neither sensible nor necessary – financing for the decommissioning of nuclear power plants and the search for a final storage should be secured through public funds

Europe’s climate protection goals will not be endangered if existing nuclear power plants are gradually decommissioned and no new ones are constructed. This is the result of case studies and scenario analyses conducted by the German Institute for Economic Research (DIW Berlin), according to which the European emissions reduction targets can be achieved through a significant expansion of renewable energies—and entirely without the use of nuclear power.

“Europe does not need nuclear power,” says Claudia Kemfert, Head of the Department of Energy, Transportation, and Environment at DIW Berlin. “Significantly rising investment costs for new nuclear power plants, increasing operating costs, and unresolved issues regarding decommissioning and final disposal make the technology economically so unattractive that there is not, and will never be, a renaissance of nuclear power.” Above all, says Kemfert, the increasingly favorable electricity production from wind power and photovoltaics could offset the decline in nuclear power.

DIW Berlin’s energy experts agree that the capital needed to decommission nuclear power plants and dispose of radioactive waste should be secured through a public fund. This “nuclear fund” could take the legal form of a governmental “special fund” or a public foundation. Corporations’ payments could be stretched out over eight to ten years following the construction phase of the bank-restructuring fund.

Nuclear power is expensive, complicated, and risky

In the Western world, nuclear power is on the way out: In many countries, its expansion has nearly come to a standstill, and more capacities are being shut down than are being newly constructed. The share of nuclear power in global electricity production has fallen from 17 to 11 percent over the past 20 years. Most of the roughly 400 nuclear power plants in operation are old, and must meet increasingly complex and expensive security requirements. New power plants are only being built in a few countries, among them China, Russia, and the UK (Hinkley Point). The projects are often delayed and are ultimately more expensive than originally planned. “Not one single nuclear power plant in the entire world has been built without extensive governmental aid,” explains DIW Research Director Christian von Hirschhausen. Stricter conditions are increasingly burdening the balance sheets of the nuclear companies, which are partially facing existential challenges.

In light of the ongoing transition towards renewable energies, DIW Berlin used an electricity market model to calculate various development trajectories of Europe’s electricity industry. The result: In the “no new nuclear power” scenario, all nuclear power plants could be replaced through a massive expansion of wind power and photovoltaics as well as increased storage capacities in 2050—simultaneously with existing decarbonization.

If there were an increase in the energy efficiency, the need for electricity storage would likewise decrease. In this scenario (“no new nuclear power & energy efficiency”), the total costs—which consist of the investment costs in the electricity generation capacities and networks, as well as the operating and production costs—would be the lowest by far. But even in the “no new nuclear power” scenario, the economic costs are lower than they would be in the case of a life extension for old nuclear power plants in Europe.

Corporations must contribute between 35 and 82 billion euros to the nuclear fund by 2024

When nuclear power plants are decommissioned, the high costs fall to the energy companies, which also must secure financing for the management and disposal of the radioactive waste. Although an induced stress test administered by the Federal Ministry of Economics this past August showed that E.ON, RWE, Vattenfall and EnBW can handle the decommissioning obligations, DIW Berlin’s energy experts remain skeptical: The companies are losing value in the stock market—and besides, the fluctuating energy prices and other technical challenges could show up on the balance sheets.

“With the establishment of a public fund, financing should be secured permanently,” said DIW research director Dorothea Schäfer. In order to cover expected costs in Germany up to the year 2099, tens of billions would be needed: Assuming an (realistic given the current low interest rates) interest rate of 1.5 percent, a total of 82 billion euros would have to be pulled together by the year 2024. At an interest rate of 4.58 percent, which the corporations have been using for their provisions, the target volume would still stand at 35 billion euros.

“Alternatives like a private foundation solution are not suitable when it comes to the nuclear industry,” says lawyer and co-author Cornelia Ziehm in reference to the financially powerful RAG Foundation, which will supposedly bear the eternal costs of the coal mining industry. Even in this instance, there would be considerable risks if the public sector were to sit on the costs—and expected costs in the nuclear field would be significantly higher. Given the current practice of nuclear companies creating internal provisions, there exists the danger that the companies will at least partially shirk their financial responsibility through restructurings.