German closures to hike prices

By Benjamin Cunningham and Cat Contiguglia

Staff writers

A German decision to shutter all nuclear power plants by 2022 will likely lead to a rise in energy prices on the Czech market and increased profits for the state-owned energy giant ČEZ, analysts say.

Facing protests and increased political pressure in the wake of Japan's Fukushima plant meltdown, German Chancellor Angela Merkel announced the closure plan May 30.

"Our energy system has to fundamentally change and can be fundamentally changed," Merkel said.

Nuclear power accounts for about 25 percent of Germany's energy supply, and Merkel said the difference will be made up by doubling renewable energy capacity and by making the country 10 percent more energy-efficient.

Analysts have debated the implications of this major policy reversal, which came just nine months after Merkel announced plans to extend the life of some German plants. Some say the shift will give Germany a leg up in the budding renewables industry; others disagree.

"They are closing the cheapest energy source, which is nuclear power plants. If they close about one-quarter of their output, they will have to replace the missing capacity by some other source, which is more expensive," said Bohumil Trampota, an energy industry analyst with Atlantik FT. "Renewable resources are not a stable energy source. ... The big part will come from coal and gas-powered plants."

An April report by the investment group Wood & Company called a German nuclear shutdown "the best possible outcome for ČEZ."

For energy consumers, it's likely to be another story, albeit not until next year, as prices are already locked in for 2011.

"All I can say is the prices will definitely not go down," Trampota said.

The writers can be reached at news@praguepost.com