Germany to pay four energy companies €2.8bn for nuclear shutdown

Germany has agreed to pay €2.8bn to four energy companies as compensation for forcing them to close their nuclear plants following the 2011 Fukushima disaster in Japan.

The agreement announced on Friday settles all legal disputes between the German government and the companies — EnBW, Eon, RWE and Vattenfall.

Up until now, the parties had failed to agree on how much compensation the operators should receive and on what terms.

“This led to years of legal disputes, including before the German constitutional court and an international court of arbitration, which can now be settled,” a government statement said.

At issue is one of the most controversial decisions of Angela Merkel’s near 16 years as chancellor. In 2010, her centre-right government had decided to extend the life of the country’s 17 nuclear power plants until 2036 at the latest. But it performed an abrupt volte face after the 2011 earthquake and tsunami in Japan that triggered the country’s worst peacetime nuclear disaster. In the months that followed, Merkel’s government decided to phase out nuclear power altogether by the end of 2022.

In December 2016, Germany’s constitutional court ruled that the phaseout was lawful, but said the companies affected were entitled to “adequate compensation”.

Under the deal announced on Friday, the government will pay €1.43bn to Vattenfall, €880m to RWE, €80m to EnBW and €42.5m to Eon.

RWE and Vattenfall are being compensated for the residual electricity they can no longer generate in their plants, while EnBW, Eon and RWE will be compensated for investments they made on the basis of the 2010 deal to extend the lifetimes of their reactors, which was then abandoned.

“This is a conservative implementation of the (constitutional) court decisions in Germany that in the end is acceptable to us,” said Vattenfall chief executive Anna Borg in a statement.

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“We welcome the envisaged agreement as it puts an end to many years of costly and time-consuming disputes around the German nuclear phase out.”

RWE said in a statement that the deal was an “important step towards creating legal certainty for all the players”.

“It’s also a good signal to strengthen confidence in Germany as a place to do business and to boost the significant investments that must now flow into the restructuring of the energy system,” the company said.

The deal should bring an end to all legal disputes surrounding the phaseout. As a foreign company operating in Germany, Vattenfall had dragged the German government before the International Centre for Settlement of Investment Disputes in Washington, seeking about €5bn in damages.