Eon rules out German nuclear power plant extension

Eon has ruled out extending the life of its nuclear power plant in Germany, even as Europe’s largest economy prepares for the rationing of energy supplies and to wean itself off Russian hydrocarbons.

“There is no future for nuclear in Germany, period,” said chief executive Leo Birnbaum. “It is too emotional. There will be no change in legislation and opinion.”

Eon, which is Germany’s biggest energy company, runs one of the three remaining nuclear sites in the country, near Munich. The Isar 2 plant is due to go offline by the end of the year as part of the country’s longstanding phaseout of nuclear power production put in place after the 2011 Fukushima disaster in Japan.

Russia’s invasion of Ukraine in February seemed initially to prompt a rethink in Berlin, with Green economics minister Robert Habeck saying he would not stand in the way on ideological grounds of any decision to keep nuclear power plants running for longer.

But this option was soon ruled out, a decision Birnbaum said Eon was happy to accept. While Isar 2 could “technically” be kept operational beyond this year, “the judgment which was really done is we have a gas emergency situation and the little relief we might be getting on the electricity side is just not really a game changer”, he said.

“There was a really serious discussion with the government,” he added. “They made a decent trade-off decision, which we can understand, and therefore the story for us is over.”

The German government has been rushing to secure alternative energy supplies as part of its long-term goal to reduce its dependence on Russian fuel. Habeck recently signed deals with Qatar for the supply of natural gas and with the UAE for green hydrogen.

Berlin last week activated the first step of an emergency plan that in the event of a gas shortage would eventually lead to gas supplies to large corporations being curtailed.

However Eon, which buys its energy on the wholesale market and does not have direct contracts with Russian providers, has joined German industry in warning against a boycott of Russian gas, which Germany relies on for more than half of its annual consumption.

Such a move would disrupt supply chains and interrupt economic activity “on a scale which I think is significantly more problematic than Covid”, said Birnbaum.

Even if small and medium-sized companies, which make up the bulk of Eon’s corporate customers, were not cut off in such a scenario, the impact on large groups such as chemicals giant BASF would have a “dangerous” effect on the rest of the German economy, he added.

The chief executive also revealed that Eon’s domestic customers were so far not objecting en masse to higher energy prices.

“I believe that there is an acceptance because we have seen now price rises in the market and we have seen little customer reaction,” he said.

“Switching as a result of price increases has been extremely low,” he added. “There is an understanding that it’s an inevitable conclusion that if prices in the wholesale market quadruple or go up tenfold, then prices need to go up. So people understand that.”