Germans May Face Higher Power Costs on Exit From Nuclear Energy

(Bloomberg) -- Germans already footing the second-highest electricity bills in Europe may face even higher costs from the country's decision to exit nuclear power early next decade.

While there's no risk of blackouts, costs could rise if transmission gaps emerge, according to Germany's Bnetza regulator. Europe's biggest power market is closing its last atomic plants in 2022 and is counting on a mix of mothballed lignite plants, wind and solar power expansion and grid stability measures to keep outages down.

“The lights will stay on,” Jochen Homann, president of the Bnetza regulator, told reporters on Monday in Bonn. “Yet there are two risks in bridging power gaps, namely redispatch and intervention in the market to drive generation up or down that may be cost factors.”

German consumer power costs are second only to Denmark, making lawmakers leery of countenancing further increases as September's federal election looms. Consumers this year may pay about 24 billion euros ($26.4 billion) in compulsory clean-energy-support fees, levies that are added directly to power bills.

Germany's remaining eight nuclear reactors generated about 13 percent of the country's power mix last year. The Economy and Energy Ministry says it's confident that growing wind and solar power along with energy-efficiency measures will help plug the gap by 2022. It also has reserve capacity of about 4 gigawatts of older lignite plants to bridge potential gaps.

Lawmakers from Chancellor Angela Merkel's Christian Democrats, such as deputy caucus chief Michael Fuchs, have pointed out that all the measures to brace for the nuclear exit cost consumers money, risking even higher bills.

Costs borne by consumers and industry to keep the power grid stable have risen in recent years as wind and solar power have surged into the system. The financial burden of coping with the additional capacity won't be solved until about 2025, the scheduled date of completion of the nation's high voltage transmission system that will transfer wind and solar power from the north to the south.

So-called redispatch costs, carried by consumers as the regulator redirects surplus power to maintain grid stability, declined slightly in 2016 after some progress was made in upgrading the grid, said Homann, while adding that “the challenge will remain for the time being.”

The regulator plans a winter power reserve of 10.4 gigawatts for 2017-2018, said Homann. The volume should decline in the cold period 2018-2019 once Germany and Austria solve a transmission bottleneck between the two countries, he said.

To contact the reporter on this story: Brian Parkin in Berlin at bparkin@bloomberg.net.

To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net, Jonathan Tirone, Rob Verdonck