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« Will an OPEC Nation’s Runaway Inflation Spark an Oil Bull Market? | Main | Vertical Option Spreads Explained by SK Options Trading »
Monday
Oct152012

Germany's push to end nuclear power comes with a hefty utility bill

Germany has long been anti-nuclear energy, and plans to transition away from nuclear power and towards renewable energy sources enjoy broad support. But the shift comes at a cost: soaring utility bills for citizens

Germany's clean energy principles are beginning to hit where it hurts: the pocketbook.

Starting in January 2013, German homeowners should see a tax they pay to support renewable energy increase by nearly half, according to a Monday press release from the country's four main grid operators.

RELATED: Top 5 nations that use renewable energy

Germans' electrical bills have long included a surcharge that is specifically used to subsidize the production of clean energy. The tax is credited with establishing Germany as a leader in green technologies, according to the Associated Press.

But the surcharge is designed to increase in proportion with an increase in clean energy production. So when wind and solar production rises, so too do homeowners' electricity bills. 

And rise it has: the surcharge has more than quadrupled since 2009, according to Philipp Roesler, Germany's Economy Minister. 

The price jump comes as the country transitions away from nuclear power – a result of anti-nuclear sentiment stretching back to Ukraine's Chernobyl disaster. After last year's Fukushima meltdown in Japan, mounting protests prompted Chancellor Angela Merkel to expedite the replacement of Germany's nuclear reactors with wind and solar energy. 

As the transition's financial reality sets in, some are worried that Germans will abandon their clean energy ideals.

"Electricity should not become a luxury item," Michael Fuchs, a leading lawmaker from Merkel's center-right coalition, told the Associated Press. "The energy switchover will at the end only be successful when met with broad public support."

It's a reminder that, at least in the short term, clean energy comes with a substantial price tag — up-front costs that many find hard to stomach, particularly amid an economic crisis. The process of dismantling a nuclear plant alone can take as long as 40 years and cost up to 1.1 billion euros, according to Reuters.

The total cost of dismantling Germany's nuclear plants ranges, depending on who you ask.Greenpeace puts the cost at 44 billion euros; Consultancy Arthur D. Little estimates only 18 billion euros.

There's a structural, environemental component too. Nuclear plants require a complex process of decontamination and entombment in concrete blocks to ensure proper disposal of radioactive material. 

The cost-benefit tension may serve as a bellwether for countries following in Germany's nuclear-to-green footsteps. Japan, Switzerland and France have all announced a shift away from nuclear energy in favor of green technologies.

It remains to be seen if citizens will bear the brunt of immediate costs in exchange for the long-term benefits. 

 

Have a good one.

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