Monday, December 31, 2012

Nuclear Options Vex Europe

The cost of being purportedly green. Aivars Lode

The owner of Électricité de France is spending millions of dollars to upgrade the plant and extend its life span for another decade, seemingly breathing new life into this town on the German border. WSJ's Alessandro Torello and Gèraldine Amiel report. Photo: Reuters
FESSENHEIM, France—The owner of the local nuclear power plant, Electricité de France SA,EDF.FR +1.27% is spending €20 million ($26.4 million) to upgrade it and extend its life span for another decade, seemingly breathing new life into this town on the German border.
But the French governent—EDF's majority shareholder—says it plans to close the site in 2016, amid an effort to reduce the country's reliance on nuclear power and promote renewable energy.
Amid uncertainty, EDF's overhaul is proceeding. But the conflict at Fessenheim illustrates a broader dilemma facing France and other European Union countries.
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Alessandro Torello/The Wall Street Journal
Turbines at EDF's nuclear plant in Fessenheim, simultaneously being upgraded and slated for closure.
Citizens have grown more wary about the dangers of the atom since the March 2011 nuclear catastrophe in Japan, and the political consensus that once existed in some countries around nuclear energy is crumbling.
But phasing out nuclear power, which helps meet nearly 75% of France's electricity needs and about 27% across the EU, could deprive the continent of a key source of energy and jobs, making it more dependent on fossil-fuel imports.
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Higher fuel bills could also hurt European economies, economists warned. And closing nuclear reactors—which emit little to no greenhouse gas—could jeopardize the EU's efforts to address concerns about global warming.
France's Socialist President François Hollande, who made the decision to close Fessenheim and other plants, said he seeks to transform his country "into a nation of environmental excellence."
He plans to lower the share of nuclear power in France's energy mix to 50% by 2025. He has extended a ban on shale gas exploration and extraction, citing pollution risks.
An unusual coalition of labor unions and business leaders is mounting opposition to Mr. Hollande's environmental drive.
In October, the directors of France's 19 nuclear plants sent a joint letter to EDF employees saying that closing the nuclear plant here would be "a profound injustice."
"Together, let's all stay mobilized," they said.
Employees have posted signs on the barbed wire surrounding the Fessenheim plant protesting against the decision to close it.
Other European countries are grappling with similar problems.
In Belgium, where nuclear power accounts for roughly 55% of electricity output, the decision to phase out nuclear energy by 2025 was made nearly a decade ago. Yet, power companies have been slow to invest in new, mainly gas-fired electricity production, as successive governments discussed whether to extend the lifetimes of some of the country's seven reactors.
Belgium could be missing as much as 4,800 megawatts of capacity—the equivalent of nearly five nuclear reactors—by 2017 as the country awaits new energy sources to come online, according to government scenarios.
In Germany, the Fukushima disaster gave new ammunition to powerful antinuclear lobby groups.
Days after the accident, the center-right coalition government of Chancellor Angela Merkelordered the immediate and permanent shutdown of eight reactors. Months later, Germany concluded a legislative process that would see its remaining nine reactors closing by 2022, reversing an extension of their lifetimes that had just been set.
Germany also boosted its efforts to expand renewable energies such as wind and solar power. The country produces over 25% of its electricity from renewable sources and plans to increase this share to 35% by 2020.
Germany's green push is coming at a price: Electricity rates for households are among the highest in the EU and are expected to keep rising. Consumer groups blame the high prices on a system of surcharges levied on retail power rates to help subsidize renewable energies, and warn that public support for the government strategy could dwindle unless companies help shoulder more of the cost.
In Maintal, a small city northeast of Frankfurt, Wilfried Dieling said his electricity bill is set to increase by about 15% in January. "It hurts," the pensioner said, noting that he was refraining from heating his glass-enclosed porch in the winter. "They make little people carry the load."
In France, President Hollande's decision to close the Fessenheim plant initially came as a surprise. The French Socialists have traditionally been strong supporters of the country's nuclear program.
The move was applauded by his Green Party coalition partners but also faced criticism.
Leading the charge was Laurence Parisot, head of French business lobby group Medef. She said France, which has among the EU's lowest electricity prices, would lose this competitive advantage if it closed Fessenheim and other reactors.
According to some industry estimates, as many as 24 of France's 58 reactors would have to be shut to achieve Mr. Hollande's goal of reducing the share of nuclear power to 50% of overall electricity output.
"The financial cost would be gigantic," Ms. Parisot said at a recent conference.
At the Fessenheim plant, which employs nearly 1,000 people, workers and politicians vowed to defend nuclear power.
"I can't believe they will shut down Fessenheim," the town's mayor Fabienne Stich said. "Not with three million unemployed in France."
EDF has said it would seek financial compensation from the government if the plant is closed.

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