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Germany pays the price for switching off nuclear power

As the nuclear energy debate is rekindled in Australia, freelance contributor Andrew McCathie looks at the German experience:

Suddenly flicking the political switch has become the hallmark of German chancellor Angela Merkel’s leadership style during her 10 years steering the German economy.

After once dismissing multiculturalism as a failure, Ms Merkel took Germany by surprise last month by suddenly opening the nation’s borders to refugees fleeing horrific wars in Africa and the Middle East.

It was a repeat of what happened in 2011 in the wake of the Fukushima nuclear disaster in Japan, when the chancellor did a remarkable U-turn and abandoned her once-unbending support for nuclear energy.

As part of her Energiewende or energy transformation, the ever-pragmatic German leader promised to dismantle all of her country’s nuclear reactors by 2022 and boost alternative energy sources for the national grid.

But more recently, the rising costs of Ms Merkel’s ambitious plan, combined with business concerns about increasing power bills placing at risk the nation’s international competitiveness, have emerged as major threats to the chancellor’s drive for a low-carbon economy.

Cost estimates of revamping Germany’s energy sector vary.

But according to some, the price tag could hit 1 trillion euros ($1.54 trillion) by 2040 – almost as much as the nation has spent on reuniting its eastern and western halves over the last 25 years.

This has not deterred Ms Merkel.

“I’m convinced that if any country can successfully implement the Energiewende, it’s Germany,” she declared last year.

In addition to phasing out nuclear power, her plan also aims to move away from fossil fuels while increasing the contribution of green energy to the national grid from 25 per cent at present to between 40 and 45 per cent by 2025.

It would then rise to between 55 and 60 per cent by 2035.

But for now, coal still plays a significant role in power production in Germany, with new plants under construction, in a nation that is one of the world’s biggest miners of brown coal.

On another front, environment-conscious Germany is spending 10 billion euros ($15.37 billion) on rolling out 2,800 kilometres of high voltage power lines across the nation to carry energy from wind turbines in the northern part of the country to the south.

German public opinion turned against atomic power

But there are political calculations for Ms Merkel behind the Energiewende.

By announcing she was ending nuclear energy in Germany, the veteran politician also effectively robbed the opposition Social Democrats and their Green Party allies of one of their few electorally attractive policies – dismantling nuclear power.

Even before Fukushima, polls showed that German public opinion was turning its back on atomic power.

Several towns across the country had already begun the shift to clean energy, partly as a result of another nuclear disaster – Chernobyl in 1986.

The Black Forest town of Freiburg has vowed to use 100 per cent renewable energy by 2035.

After the catastrophic images of the crippled Fukushima nuclear complex saturated the world four years ago, 60 per cent of Germans told pollsters they wanted an end to atomic power as quickly as possible.

Moreover, German support for the Energiewende has remained at 60 per cent, despite the threat of rising costs of the planned switch to a green economy.

In a bid to contain the costs, Ms Merkel has now been forced to cut government support for wind and solar energy, which was seen as driving up power bills for both consumers and businesses.

But critics of the slower shift to alternative power say that cutting support could disrupt the move away from nuclear energy towards green power.

Soaring power costs ‘endangering our industries’

Despite Berlin’s efforts to keep the lid on the costs of the Energiewende, the country’s network of power operators said this month the surcharge levied on German consumers to support renewable energy generation will rise 3 per cent next year.

The increase will now probably translate into higher power bills for consumers in a country where electricity prices are already steep compared with other Western nations.

The rise in the surcharge led to German business lashing out at economic minister Sigmar Gabriel accusing him of not having the costs of the Energiewende under control.

Ulrich Grillo, who heads the powerful Federation of German Industry, said the increase “endangered our industries”.

At a total of 22.3 billion euros last year, the surcharge so far represents the lion’s share of the cost of Germany’s energy revamp.

There is also a push to add more alternative energy sources such as wind power and biomass to the national mix, which will again boost costs.

In addition, with about 18 per cent of German energy still powered by nuclear sources, the nation has some way to go to ramp up renewables to take over from atomic power without being forced to turn to more fossil fuels.

Meanwhile, Germany’s giant energy companies have struggled to adapt to the energy revolution envisaged by Ms Merkel.

Germany’s biggest energy group E.ON reported a record loss of 3.2 billion euros last year, stemming from costs triggered by the need to radically restructure in order to accommodate the phasing out of nuclear power.