German utilities able to meet the cost of decommissioning

12 October 2015


A new report commissioned by the German Federal Ministry for Economic Affairs and Energy has confirmed that the companies involved in supplying nuclear energy in Germany have "sufficient provisions" to cover the costs of decommissioning nuclear power plants and disposal of resulting radioactive waste.

The expert evaluation prepared by auditing company Warth & Klein Grant Thornton AG is the first to provide a transparent breakdown of the expected costs of decommissioning.

In Germany the power plant operators - EnBW, EOn, RWE and Vattenfall - are responsible for covering the costs of decommissioning and radioactive waste management. In a joint statement they said the review "accepts the accounting practices that have been used by the operators for decades and which have also been certified by the world's leading auditing firms."

The auditors found the €38.3 billion ($48.5bn) in provisions made by the companies concerned were based on cost estimates of around €47.5bn - "higher than the international average," with Germany's estimated dismantling costs at €857m per reactor compared with €205m-€542m in other countries. In addition, the experts found the potential for €6bn of efficiency-related savings.

Discounting rate and the estimated cost increases likely to be incurred by the nuclear sector were both key factors in assessing the amount of provisions needed. Scenarios developed by the experts based on a range of different assumptions, showed that provisions of between €29bn and €77bn would be required. But experts said that scenarios requiring the highest provisions are not likely to materialise, as they are based on the assumption of major losses being incurred by the companies over a long period of time. The operators also deemed the upper scenarios as "unrealistic" and said they would be based on interest rates remaining very low well into the future, accompanied by extremely high cost and price increases, resulting in long-term negative specific real interest rates.

Finally, the experts determined that the companies' revenues suffice for them to be able to cover the disposal costs they will incur up to the end of this century.
The ministry said that the expert opinion does not point to any need for immediate action to be taken - beyond the adoption of the draft legislation on extended liability for the dismantling of nuclear power plants and the establishment of the commission to review the financing of Germany's nuclear phase-out.



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