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True cost of nuclear examined in new study

The German Renewable Energy Federation (BEE) has presented a study involving possible costs in the event that Germany abandons the use of nuclear energy.

The German report has tried to calculate how much it would cost to insure nuclear power plants. Image: philippe leroyer.

While the nuclear power plant operators in Germany collect the profits, consumers and the government would be required to foot the bill in the case of loss. The study shows how expensive nuclear power would have to become if instances of damage were adequately insured.

The Japanese nuclear power disaster at Fukushima has put the question about the costs of nuclear back on the agenda. While profits from the operation of nuclear power stations land in the coffers of the operators – the estimates are €1 million per day, per nuclear power plant – the government and taxpayers are asked to foot the bill in the case of loss.

This was demonstrated once again in Japan: although the nuclear power plant operator Tepco plans to pay compensation, the amounts in question do not nearly suffice in order to repair all of the damage caused by the disaster.

The German Renewable Energy Federation has now submitted a study that deals precisely with this topic. In the study "Calculation of an Adequate Risk Insurance Premium for Covering Third-Party Liability Risks Resulting from the Operation of Nuclear Power Stations" the (fictitious) premium for liability insurance is determined for loss that could result from a nuclear disaster in a German nuclear power plant, according to the summary.

The authors of the study come from the Leipzig Insurance Forums, a spin-off of the University of Leipzig.

As a result, a mean insured sum in the amount of approximately €6,090 billion would be payable for a nuclear disaster. The amount of the annually payable premium varies between €0.01 and €305.83 depending on the probability of occurrence used as the basis of calculation of such a case of loss.

However, since provision of the coverage amount after a thousand years, for example, would not be realistic, different periods of commitment were assumed, the authors go on to write.

According to the calculations, an annual insurance premium in the amount of €19.5 billion would be payable over the entire period for every nuclear power plant, given provision of the entire insured amount after 100 years. Yet in light of the residual terms that continue to apply in Germany, such a period cannot be regarded as realistic. "Shorter periods, however, result in an exponential increase of the payable annual premiums," the study continues. This then results in the determined value of €6,090 billion.

If these costs were reallocated to consumers, then there would be an increase in the price for electricity generated by nuclear power plants of between €0.139 and €2.36 for each kilowatt-hour for a period of commitment of 100 years. This margin, it adds, would range from €3.96 to €67.3 per kilowatt-hour for a ten-year period of commitment of the insurance premium.

As a result of their study, the authors come to the conclusion that "in practical terms nuclear disasters are not insurable." They justify this, among other things, with the extreme amount of the expected maximum damage as well as the scarcely estimable probability of a nuclear disaster.

As a possible solution, the authors propose establishment of a private insurer or use of the international capital markets in order to secure the respective liability risks.

In general, however, the study aims above all to make a contribution toward the current social debate on the risks of nuclear power and the associated costs of nuclear energy. "This premium should thus be regarded as a statistical parameter that must be included in the entire external costs of the nuclear fuel cycle when accident-related costs are taken into consideration," it concludes.