Explainer: How will Germany implement its nuclear power extension?

BERLIN/FRANKFURT, Oct 18 (Reuters) – Germany’s economy and environment ministries drafted a law to extend the lifespan of the country’s remaining three nuclear power plants until April 15, 2023, after Chancellor Olaf Scholz ordered the ministries to lay the legal framework to keep them operational.

Europe’s biggest economy had planned to complete a phase-out of nuclear power by the end of this year, but Scholz is pushing for an extension following a collapse in energy supplies from Russia because of the war in Ukraine.

Here are answers to a few urgent questions on the planned extension:

WHAT’S NEXT FOR THE GOVERNMENT?

After amending the Atomic Energy Act to extend the lifespan of the plants, the draft bill should go through the cabinet on Wednesday and with the three coalition partners agreeing to it, is expected to pass the upper and lower houses of parliament by the end of November.

WHY WAS THIS A COMPROMISE FOR THE COALITION PARTIES?

The liberal FDP party has been pushing to keep all three reactors active until 2024, while the Greens had insisted on putting only two plants on reserve until spring next year. The decision by Scholz, of the SPD party, is seen as a compromise between the two parties’ demands, although the FDP, unlike the Greens, sees it as a political win.

WHAT DOES IT MEAN FOR THE COMPANIES?

The operators of the three remaining nuclear power plants are E.ON (Isar 2), RWE (RWEG.DE) (Emsland) and EnBW (EBKG.DE) (Neckarwestheim 2).

With a total capacity of 4.2 gigawatts, they currently account for 6% of Germany’s power generation and are scheduled to be shut down by the end of 2022 under the country’s nuclear exit, decided in the wake of the 2011 Fukushima nuclear disaster.

Any lifetime extension requires a change to that law.

E.ON said it has sufficient staffing to keep operating Isar 2 for a limited period, adding some employees had agreed to delay early retirement schemes to help out.

EnBW also said it was able to rely on its “experienced specialist staff”.

ANY ADDITIONAL WORK NEEDED BEFORE EXTENDING THE LIFESPAN?

Yes. Since Germany will not procure new fuel rods, the Emsland and Neckarwestheim 2 plants must be shut down for a few weeks by the end of this year or early next year to reconfigure their fuel rods. The Isar 2 plant will be off the grid in October for repair on a leak at the site.

WILL THERE BE PROFITS?

Yes.

So far, the plants were scheduled to phase out operation by the end of 2022, meaning an extension will generate earnings that have not been previously baked in by the companies.

How big those will be depends on the selling price. E.ON has said that Isar 2 is expected to generate 2 terawatt hours (TWh) worth of electricity in 2023, which would translate to a 350-million-euro ($345 million) boost based on day-ahead baseload prices of 173 euros per megawatt hours (MWh).

If year-ahead prices are anything to go by, the financial windfall could even be 772 million euros.

Emsland and Neckarwestheim 2 will both generate 1.7 TWh, according to the draft law.

Senior Bernstein analyst Deepa Venkateswaran said the estimated additional profit for E.ON and RWE would be “marginal”, around 300 million euros each, assuming a price cap of 180 euros per MWh.

HOW LONG CAN THE PLANTS RUN WITH EXISTING FUEL RODS?

The operators of the plants are now taking steps to ensure that the reactors can run until April 15, as requested by Scholz, adding that this requires a change in current law.

EnBW said Neckarwestheim 2 could in principle run until mid-April.

E.ON’s Isar 2 will run until March 2023 based on current fuel rods, the company said, adding a rearranged set-up could in theory have enabled a run-time until August 2023.

“For the time after that, fresh fuel elements would have to be procured,” E.ON said.

That, however, requires some lead time.

According to industry group Nuclear Technology Germany (KernD), it usually takes around one year until fresh fuel rods are delivered.

If operators have already ordered some components ahead of time, that can be reduced to 6-7 months, KernD said.

CAN GERMANY EXTEND NUCLEAR POWER BEYOND APRIL 2023?

Politically, extending the lifespan of nuclear power is a red line for the Greens party, which has ruled out buying new fuel rods for longer operation of the country’s remaining nuclear power plants. But if electricity production and the consumption situation tightens during winter, the FDP could use the opportunity to push for another extension.

($1 = 1.0140 euros)

Reporting by Riham Alkousaa, Christoph Steitz, Tom Kaeckenhoff, Vera Eckert and Markus Wacket; Editing by Miranda Murray and Emelia Sithole-Matarise

Our Standards: The Thomson Reuters Trust Principles.

Read More

Tyisha Motsinger