Der Spiegel:
With the government’s decision to phase out nuclear energy, Germany’s four biggest utility companies face an uncertain future. Profits could tumble this year by as much as 30 percent and the companies are also becoming increasingly vulnerable to takeovers. Are the days of giant energy companies numbered in Germany?
Jürgen Grossmann loves playing the role of the lone knight. Speaking in Düsseldorf last week, the veritable giant of a man declared that neither the German government nor Chancellor Angela Merkel herself could “divert him from his nuclear plans.” As the CEO of RWE, Germany’s second-largest electricity producer, Grossmann has an enormous responsibility toward both his company and its 70,000-strong workforce. He says job security is close to his heart, and because of this, he has vowed to fight for his employees.
And fight he must. The Japanese nuclear disaster at Fukushima and the subsequent debate about nuclear safety have plunged Germany’s energy industry — in particular the country’s four biggest utilities, RWE, E.on, EnBW and Vattenfall — into a hitherto unimaginable crisis.
Profits now look set to plummet. According to internal company estimates, after-tax earnings could fall by up to 30 percent this year alone. That’s partly because customers are fleeing in droves to the big four’s environmentally friendly rivals, such as Lichtblick and Naturstrom, companies that offer electricity free of nuclear or coal sources. The share prices of electricity companies have been on the decline for months. As a result, the stock exchange darlings of yesterday may now be the takeover candidates of tomorrow.
As if to add insult to injury, the German government this week announced it would permanently reverse its plans to extend the lifespans of nuclear power plants in the country. A post-Fukushima “moratorium” had already taken the seven oldest of Germany’s 17 nuclear power plants off the grid. They will now stay permanently offline, as will another plant that was already out of operation following an accident in 2009. Under the plan agreed by Merkel’s Christian Democrats (CDU) and the business-friendly Free Democrats (FDP) on Sunday, Germany’s remaining nuclear plants will also be shut down between 2021 and 2022.
The government has handed a small olive branch to nuclear energy producers by allowing them to transfer their allotted energy production from the plants that are currently offline to newer ones that will continue to operate until 2022. But the utilities had also hoped that the government would scrap the nuclear fuel tax it had introduced as part of an austerity package passed last year. The tax is intended to generate around €2.3 billion a year through 2016 for the government to help pay off its public debt. With the current closure of the eight plants, that sum is already expected to drop to around €1.3 billion annually, but it is a sum the Finance Ministry has refused to do without.
Doom for Germany’s Big Four Utilities
Berlin’s nuclear exit strategy spells doom for the utilities. Atomic energy expert Wolfgang Pfaffenberger from Jacobs University in Bremen estimates that the eight plants that are being shut down this year generate annual profits of over €1.5 billion and revenues of at least €3 billion. All of Germany’s 17 nuclear plants together generate around €4 billion in profits and €7.5 billion in turnover — all revenues that will disappear by 2022 at the latest.
To sum things up, the government is shutting down a highly profitable industry that produces no carbon emissions and that they can tax at will. That’ll be the shot in the arm to Germany’s economy!
The rest here.