Merkel Nears Agreement to Extend Operation of E.ON, RWE Nuclear Reactors

German Chancellor Angela Merkel called a coalition meeting to agree a nuclear strategy that would allow the four largest utilities including E.ON AG and RWE AG to avert a planned phase-out of their reactors.

In talks in Berlin this evening, Merkel is spelling out how much longer the remaining 17 reactors can run beyond the current 2022 phase-out, Christian Democrat lawmaker Joachim Pfeiffer said on Sept. 3. Merkel will also tell the four companies how much of the profit from lifespan extensions must be diverted to investment in renewable-energy programs.

Merkel has sought to balance the demands of industry, which seeks an extension of about 20 years, and aides such as Environment Minister Norbert Roettgen, who are wary of a legal and political backlash over nuclear power. The utilities have pressured Merkel to speed up making a decision on their reactors, saying she’s holding up investment plans.

The utilities, backed by the BDI industry federation, “will get a result tonight that they can surely live with,” said Claudia Kemfert, chief energy economist the Berlin-based DIW institute, in a phone interview today. “Every year a reactor can run longer means profit.”

The DIW estimates that profit from an extension of nuclear power would boost combined annual earnings by an average of 6.4 billion euros ($8.25 billion) at current prices. Merkel’s coalition may agree tonight to extend nuclear licenses on the basis of the age of each reactor, according to a Sept. 4 report in the Stuttgarter Zeitung newspaper.

Keeping younger reactors running longer than older plants may help Merkel fulfill her stated aim of safeguarding the supply of affordable base-load electricity, the round-the-clock power on which industry depends. Costlier to generate than nuclear power, renewable energy had a 14 percent share of German power in 2009 compared with 23 percent from reactors.

Merkel’s Cabinet is expected to hold a press conference later tonight in Berlin at the end of talks.

To contact the reporters on this story: Nicholas Comfort in Frankfurt at ncomfort1@bloomberg.net; Brian Parkin in Berlin at bparkin@bloomberg.net.

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