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Nucs down in Germany - prices up in Europe?

Sven Bode

In: Energy Policy (2009) 37, 7, p. 2492-2497

Current legislation on power production from nuclear energy in Germany defines certain remaining quantities of permitted electricity production for nuclear power plants. These quantities are defined for each nuclear power plant and are measured in TWh. In the discussion about climate protectionand market trend of electricity prices it is regularly stated by policy makers that the nuclear phaseout will result in an increase in electricity prices and CO2 emissions. As a consequence a revision is proposed, especially from the Liberals (FDP) and Conservatives (CDU). The following article discusses this issue analysing the different options investors and operators under different scenarios have. It shows firstly that both emissions and power prices can indeed increase, and secondly that the mere discussion about potentially reversing the phasing-out decision can lead to an increase in electricity prices as investment behaviour may change based on expectations regarding future regulation. I conclude that – ceteris paribus – the nuclear phase out is likely to result in an increase in CO2-emissions and prices.