German Utilities Said to Consider Selling Bonds in Nuclear Plant Agreement
German Utilities may Consider Bond Sales Nuclear Accord
Hannelore Foerster/Bloomberg
The government wants Germany’s four nuclear power plant operators to help pay for investment in so-called smart grids and storage capacity for renewable power.
The government wants Germany’s four nuclear power plant operators to help pay for investment in so-called smart grids and storage capacity for renewable power. Photographer: Hannelore Foerster/Bloomberg
Germany’s four largest utilities are considering selling bonds to help finance renewable energy plans, according to two people familiar with the matter.
RWE AG, E.ON AG, EnBW Energie Baden-Wuerttemberg AG and Vattenfall AB are studying bond sales as part of talks with the government to extend the lifespan of nuclear plants, the people said. They requested anonymity as the government has yet to decide on an extension. The bonds would be guaranteed by KfW Group, Germany’s state-owned development bank, one person said.
The government wants Germany’s four nuclear power plant operators to help pay for investment in so-called smart grids and storage capacity for renewable power. All four face a tax on fuel rods from 2011 that may raise a net 2.3 billion euros ($2.9 billion) a year for the government budget.
RWE spokesman Juergen Frech and E.ON spokeswoman Rebecca Middleton both declined to comment when asked about the bond proposal. The utilities prefer “not to pay such a tax but adopt a common fund solution” for developing renewable energy, Frech said in an interview. EnBW didn’t return calls seeking comment. Steffen Herrmann, a Berlin-based spokesman for Vattenfall, Sweden’s biggest utility, also declined to comment.
Selling bonds to finance investment may be attractive to the utilities as long as interest rates are below those demanded by banks for loans, said one of the people. The government rejected an earlier proposal from lawmakers from the ruling Christian Democrats, Chancellor Angela Merkel’s party, to enroll the KfW directly, getting the bank to sell bonds and set up a 10 billion-euro investment fund.
Tap Profit
In comments this week, Merkel and Cabinet ministers dug in their heels over introducing the fuel rod tax to help the budget while leaving open the question of how to further tap windfall profit from extending nuclear power to spark investment in renewable energy.
“I favor both the tax proposal as well as -- quite independently -- using a considerable portion of windfall profit for renewable energy,” Environment Minister Norbert Roettgen told reporters in Berlin this week. “How the utilities invest in those projects is for them to decide.”
The combined profit of the four utilities stands to grow by about 6.4 billion euros for each year that the lifespan of the nuclear plants is extended, the DIW economic institute said in a July 29 report. The 17 reactors of the “Big Four” supplied 23 percent of German power last year.
To contact the reporters on this story: Nicholas Comfort in Frankfurt at ncomfort1@bloomberg.net Patrick Donahue in Berlin at at pdonahue1@bloomberg.net; Brian Parkin in Berlin at bparkin@bloomberg.net.
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