Lion’s Share at Profits in Billions From Lifetime Extension of Nuclear Power Plants Will Remain With Operators

Operators of nuclear power plants would receive profits in billions, if the lifetime of nuclear power plants were extended. The German government expects to get their share from these extra profits. However, that is not very likely. These are the findings of the latest ZEW Energy Market Barometer conducted in May 2010. The Centre for European Economic Research (ZEW) conducts the Energy Market Barometer every six months and surveys some 200 energy experts from research and practise about their opinion on the development on the energy markets.

Extra duties in combination with the lifetime extension of nuclear power pants are a major part of the budget reorganisation announced by the German government earlier this week. 65 percent of experts participating in the survey hold the opinion that the German government will not be able to get their share from the extra profits which could derive from extending the lifetime of nuclear power plants. Only around one fifth of survey participants thinks that the German government will receive all or most extra profits. “The experts’ view that the public purse would not profit from the lifetime extension is due to political opposition against similar attempts in the past. Another important factor is that the exact numbers of possible extra profits are only known to the operators of nuclear power plants and not to politicians,” says Dr. Andreas Löschel, ZEW environmental researcher.

Collecting extra profits is part of the latest financial planning to meet the debt brake requirements. Furthermore, it is the foundation pillar of the energy concept announced by the German government. In the coalition agreement of 2009, CDU, CSU and FDP announce that the major part of extra profits from the lifetime extension of nuclear plants should go to the public purse. However, if the tax on fuel elements, which was discussed recently, is realised, the German government turns down exactly the major parts of profits, if no additional measures for skimming of extra profits are made.

"The newly discussed tax on fuel elements is not going to skim of extra profits from the operators in the long run," says Dr. Andreas Löschel. Calculations indicate that the additional income from a possible lifetime extension of nuclear plants could be about five billion euro in the future. The expected income from the tax on fuel elements would be more than two billion euro, thus skimming of the extra profits completely at first. "The major part of extra profits is first going to arise in the long run, if lifetime extensions of nuclear power plants are going to pass the dates which were agreed in the nuclear atomic phase-out," says Dr. Andreas Löschel. These profits are going to exceed the income from tax on fuel elements. This is particularly the case because the tax on fuel elements is only raised for energy production. It does not take the energy price into account which is expected to increase rather than decrease in the next few years.

Background Extra Profits

Extra profits from the lifetime extension result from relatively low production costs of approx. 2.65 cent per kilowatt hour in the nuclear reactors already written off. As the exchange price is approx. 5.4 ct/kWh, the profit margin is high. The lifetime extension of nuclear power plants would make profits possible in the future.

Background Energy Market Barometer

trading and service enterprises) conducted every six months. The experts are asked to give their expectations regarding the short- and medium-term development on national and international energy markets. The findings or the latest survey (May 2010) are published in the ZEW News 07/08-2010.

For further information please contact

Prof. Dr. Andreas Löschel, Phone: +49 (0)621/1235-200, E-mail: loeschel@zew.de