Does the use of nuclear power lead to lower electricity prices? An analysis of the debate in Germany with an international perspective

There is an ongoing discussion if it is reasonable to start using nuclear energy, to extend its use, or what effects its phase out could have. In July 2011, four months after the nuclear accidents in Japan, Germany decided to return to the policy of phasing out nuclear energy step by step until 2022. This policy was already decided upon in 2000. With this, a decision made some nine months earlier was taken back. In fall 2010, the government and Parliament had approved the extension of the operating lives of its nuclear plants by at least 14 years. One reason was the expected effect on the electricity price, which was said to be lower with extended nuclear plant life spans. However, there is an ongoing debate on this argument, not only in Germany. This article presents a critical survey of the core arguments brought forward in favour of expected future price cuts. It is shown that the theoretical electricity market models used in these exercises are not adequate to reliably predict such effects. Furthermore, evidence is presented suggesting that extending nuclear plant life spans or the commissioning of new reactors in other countries is unlikely to curb domestic electricity prices.