May 11 (Bloomberg) -- Energie Baden-Wuerttemberg AG shut down its Obrigheim nuclear reactor, the second to close as the German government moves ahead with a promise to end the nation's dependency on atomic energy, the source of a third of its power.

German Chancellor Gerhard Schroeder, under pressure from his coalition partner, the Green Party, has pledged to end the use of nuclear power in the next two decades. A 30 percent rise in wholesale power prices in the past year won't slow the decommissioning, according to the Environment Ministry.

Opposition parties, as well as the BDI German industry association, which represents about 107,000 companies including DaimlerChrysler AG and Siemens AG, want to keep open the option of nuclear power, as energy costs rise and government laws limit emissions of carbon dioxide.

``The withdrawal seems to be going according to plan, but if power prices continue their upward trend and they have pressure to commit to their CO2 targets, they may have to rethink the plan,'' said Jorund Haartveit, an analyst at Natsource-Tullett Scandinavia AS in Oslo. ``It's difficult to achieve all the targets at the same time, so it looks likely that they will have to extend the lifetime of their reactors.''

EnBW, Germany's third-largest utility by sales, said it permanently shut down the 340-megawatt Obrigheim unit today, the oldest and smallest of the country's 18 reactors. The closure will cut Germany's nuclear capacity by about 1.7 percent.

``The government is sticking to the decision to phase out nuclear power,'' Michael Schroeren, a spokesman for the German Environment Ministry, said in a telephone interview on April 25. ``In the foreseeable future, will have to get used to higher raw material prices.''

Rising Power Prices

Wholesale power prices have risen by more than a third in the past year as rising coal, natural gas and oil prices and the introduction of a market for carbon-dioxide emissions this year pushed up costs for generators. Power for delivery next year jumped to a record 39.50 euros ($51) a megawatt-hour on April 20, compared with 31 euros a year ago.

Utilities including E.ON AG and RWE AG, the country's top two, boosted power prices for households and industrial users by between 4 percent and 10 percent. Lobby groups such as the association of power consumers VIK have said that power-price increases would lead to additional costs for industrial users, totaling about 900 million euros next year.

In addition to the 20,000 megawatts of nuclear power Germany has to replace, the country has another 20,000 megawatts of capacity to build as stations fired by fossil fuel reach the end of their operating life. Germany, Europe's largest power consumer, will need to invest a total of about 40 billion euros by 2020 to replace a third of its installed capacity.

More Coal, Gas

Germany's phase-out plan, negotiated with the power companies five years ago, became law in 2002. Under the nuclear exit law, each reactor was assigned a fixed amount of electricity it was allowed to generate. Once the electricity is produced the respective unit has to be switched off.

The next reactor to be decommissioned will probably be RWE's Biblis A, a 1,225-megawatt unit built in 1974. It will need about three years to generate the 26 terawatt-hours of electricity it is still allowed to produce.

Germany aims to make up for the loss by adding more natural- gas and coal-fired stations, which emit carbon dioxide, while trying to cut carbon emissions 40 percent from 1990 levels by 2020. It has cut emissions by about 19 percent so far in an effort to combat global warming. Nuclear plants don't emit carbon dioxide.

Wind, Solar Supply

Utilities have started to draw up plans for the next generation of power plants. RWE will decide by the end of the year whether to invest 2.2 billion euros to build a new 2,200- megawatt lignite-fired plant.

Regional utilities and energy traders such as Mark-E and Trianel European Energy Trading GmbH plan to build gas-fired stations that may start operating in 2007 if construction starts this year. Natural gas pollutes less than coal. Austria's EVN AG and Statkraft AS of Norway also plan to invest in Germany.

The German government is also counting on renewable-energy sources such as wind, solar and biomass to help fill the gap. It wants renewable sources to account for at least 20 percent of national power consumption by 2020, compared with 9 percent now. Windmills to account for the majority of the increase will mostly be built offshore in the North and Baltic seas.

Power producers have to keep fossil-fuel fired plants in reserve for times when slow winds curtail supply. Wind turbines can now meet as much as 6 percent of Germany's power needs.

Second Closure

EnBW's Obrigheim is the second active reactor to be permanently closed after Stade, a 630-megawatt unit owned by E.ON, in November 2003. The unit, located north of the southern German city of Stuttgart, produced in its 36 years of operation more than 90 terawatt-hours of electricity.

Muelheim-Kaerlich, a reactor owned by RWE that was shut down in 1988 for safety reasons after 13 months of operation, has also been decommissioned as part of the phase-out program.

The availability of Obrigheim, which has enough capacity to supply power to more than 350,000 households, ranged in the past five years from 88 percent to 96 percent, one of the most reliable in Germany.

``From a technical point of view, there's no need for Obrigheim to stop operating,'' Karlsruhe-based EnBW has said. ``We respect, however, the political decision and legally fixed exit from nuclear power, and fulfill with the shutdown our part of the agreement.''

To contact the reporter on this story: Veronica Lizana in London vlizana@bloomberg.net.

Last Updated: May 11, 2005 04:03 EDT