The cost of Germany's long and painful nuclear regret

By Jules Rimmer

Germany's decision to decommission its nuclear program may have raised electricity prices by 25%

One of Germany's decommissioned nuclear power plants at Gundremmingen in southern Germany. The decision to mothball the plants was taken after the accident at Fukushima in Japan in 2011.

An energy analysis published by JPMorgan has put some numbers on the extent of that error that German Chancellor Friedrich Merz has admitted from its decision to shutter nuclear production in wake of the accident at Japan's Fukushima plant in 2011.

The assessment was made by JPMorgan Asset and Wealth Management's chairman of market and investment strategy, Michael Cembalest. In a lengthy report on energy markets, he devoted one chapter to what he labels Germany's "nuclear entscheidungsreue" or "nuclear regret'" He quoted Merz as stating, "So, we're now undertaking the most expensive energy transition in the world; I know of no other country that makes things so expensive and difficult as Germany."

Cembalest highlights research undertaken by JPMorgan that scrutinized the costs incurred to the German economy stemming from its decision to decommission its nuclear power plants after the Fukushima incident. Had it not made this panicky move, Cembalest estimates that Germany would have required 50% less electricity generation from fossil fuels, 84% less generation from imported natural gas, 27% less fossil fuel capacity and 42% less natural gas capacity.

Cembalest estimates electricity prices in 2024 were almost 25% higher than they would have been, were they to have persevered with the nuclear program. As a share of consumption, Germany's electricity imports are double what they were a decade ago.

German energy intensive manufacturing output

The competitive repercussions have been severe: Germany's industrial power prices are now three times higher than those of the U.S. and China. This partly explains, Cembalest writes, the deindustrialization that has afflicted its economy so debilitatingly in the last few years.

Cembalest cites research by Radiant Energy Group that the cost of restarting Class 2 reactors could be $1 billion to $ 3 billion each. It's feasible, they say, but it's not cheap.

German electricity imports and exports

-Jules Rimmer

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