The government is slated to pay Germany’s main utilities €2.29bn ($2.73bn) in compensation for unsold electricity in the wake of the country’s nuclear phase-out, with the bulk of payments going to Vattenfall and RWE.

The payments are laid down in the cornerstones of an understanding between Berlin and the utilities that aims at terminating years-long legal battles. Germany’s constitutional court in 2016 and 2020 had ruled in favour of compensation, but also said the government’s decision to exit atomic power is legal.

Vattenfall is due to receive €1.43bn, RWE €880m, EnBW €80m, and E.ON via its PreussenElektra unit €42.5m.

'Time-consuming disputes'

Vattenfall chief executive Anna Borg despite the massive compensation payment still complained it was a “conservative implementation of the court decisions” but added that it “in the end is acceptable to us.”

“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,” Borg said.

“Germany is an important market to us and we will now focus on moving forward with our plans to phase out fossil fuels and continue to invest in climate friendly heating and renewable energy production.,

The compensation is for electricity volumes utilities would have been entitled to still sell after a 2010 government decision to extend the life span of nuclear reactors, which was reversed after the Fukushima nuclear disaster in 2011. Berlin then decided to immediately close eight plants, with the remaining nine power stations to be phased out by the end of 2022 at the latest.

Three more nuclear power stations are in line to be switched off this year, with another three waiting for closure next year.

Nuclear share halved

A smaller amount of the compensation is for investments done after the life-span extension decision, which due to the nuclear phase out were in vain.

The share of atomic energy as part of Germany’s gross electricity production halved in the last decade to little more than 11%, while that from renewable energy sources surged to meet almost half of the power demand of Europe’s largest economy.

Germany faces an even much larger bill for its phase out of coal and lignite by 2038 at the latest.

The government last year approved a total of €40bn in payments to coal region to cushion the structural change. Also, utilities will receive massive compensation payments for phasing out lignite mines and closing power stations – such as RWE which is slated to receive €2.6bn, and Czech lignite mining firm LEAG, which is entitled to another €1.75bn.

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Berlin to pay billions to Vattenfall and RWE for nuclear exit