Germany’s energy problem solved 'just like that’


Following prolonged meetings last week-end, Germany’s Coalition Government has decided to grant its 17 nuclear power stations operating-life extensions averaging 12 years. This decision reverses the controversial nuclear phase-out policy that was adopted in 2001, whereby all Germany’s nuclear plants would be closed by c2018.

The impact of this policy U-turn is wide-ranging. In effect, it should solve Germany’s energy supply problem at a stroke – or in the catchphrase of the late Tommy Cooper, ‘just like that’.

Of course, the new policy could fall apart either because it does not secure the necessary parliamentary and legal approvals or if the existing Coalition Government falls – given recent electoral setbacks, this is far from improbable. Assuming it does proceed, Germany’s leading energy companies, including E.On and RWE, will pay far more tax, notably through a c£2 billion per year nuclear fuel-rod levy. Part of this tax will be re-cycled into the renewable energy sector.

Do these developments have any lessons for the UK - apart from the possibility of imposing a nuclear fuel-rod tax on EdF’s UK nuclear assets? The uncomfortable reality for the UK – and for DECC – is that a viable solution to the UK’s lack of base-load generating capacity cannot be found so readily.

Of course, the life-spans of several UK nuclear plants could be extended, along with the deferral of the planned closure dates of the older coal-fired plants. But there is no easy answer - nor is there any way of conjuring up the size of surplus cash flow that will accrue to Germany’s nuclear generators.

Instead, the drive for UK new nuclear-build must continue, with every effort being made to propel EdF and the German Horizon consortium towards the first ‘concrete pour’.

Germany may have found a neat solution but is time running out for the UK?