Germany Compensates Utilities $2.9 Billion for Nuclear Exit

Germany agreed to compensate Vatenfall, RWE, EnBw and E.ON 2.4 billion euros ($2.9 billion) for losses suffered following the country’s decision to phase out nuclear power after the Fukushima Dai-Ichi meltdowns.

The deal ends the decade-long battle between the government and Germany’s biggest energy companies. It comes in an election year when the green credentials of Europe’s largest economy will be a key topic among voters. Abandoning nuclear power will eliminate one of Germany’s top sources of emissions-free electricity that is available around the clock.

Friday’s settlement underscores the long-lasting economic impacts of the Fukushima accident even outside of Japan. Just months before the 2011 disaster, Germany’s government had agreed to extend the operating lifetimes of nuclear plants. But the government abruptly reversed course after the accident and decided to end nuclear power generation by the end of 2022 at the latest.

“This led to years of legal disputes, including before the Federal Constitutional Court and an international court of arbitration, which can now be settled,” read a government statement on Friday.

Vattenfall will receive 1.43 billion euros, while RWE will get 880 million euros to compensate for residual electricity that the utilities won’t be able to generate. EnBW will receive 80 million euros and E.ON 42.5 million euros to compensate for investments.

As part of the overall agreement, the companies withdrew all pending legal proceedings and waived any legal claims contesting the deal.

“We welcome the agreement we are seeking, which will now put an end to many years of costly and time-consuming disputes over the German nuclear phase-out,” read a Vattenfall statement.

The Swedish company won a top court ruling in November, arguing Germany failed to implement a 2016 decision that gave utilities the right to seek compensation following the country’s decision to close nuclear power plants.

“It is an important step toward creating legal certainty for all parties involved,” read an RWE statement, adding that the deal strengthens confidence in Germany so that it can attract “the considerable investments that must now be made in the restructuring of the energy system.”

Japan will commemorate the Fukushima Dai-Ichi disaster next week. More than 160,000 people were evacuated from the area surrounding the nuclear plant after a magnitude 9 earthquake, the biggest ever recorded to hit Japan, caused a massive tsunami that overwhelmed the site.

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