German supreme court calls for nuclear quota compensation changes in exit law

London — Germany's highest court has called for further adjustments to the compensation of surplus nuclear quota in a ruling that favors Swedish utility Vattenfall, the Bundesverfassungsgericht (BVerG) said Nov. 12.

Vattenfall sued against quota compensation details in a 2018 reform of the atomic exit law (16th Amendment).

"The court already noted in 2016 that Vattenfall could sell surplus nuclear production rights of its reactors closed 2011 only to one [reactor operator] -- at conditions that the buyer could choose," Vattenfall said in a statement, welcoming the latest ruling confirming this.

Nuclear production rights were granted back in 2001 in Germany's first nuclear phase-out agreement, based on production volumes rather than set closure dates.

These rights were only partially reversed by the 2010 nuclear extension bill.

However, the 2011 Fukushima incident prompted the government immediately to shut older reactors, including all of Vattenfall's reactors, leaving the utility with surplus quota.

Germany's environment minister, responsible for nuclear safety, said the federal government would accept the ruling.

"We will carefully analyze the ruling and quickly introduce legislation that meets the requirements of the Federal Constitutional Court," minister Svenja Schulze said in a statement.

The minister underlined that the ruling did not question the nuclear exit by 2022, but only concerned the minor area of possible compensation for nuclear operators.

Quota court case

Vattenfall and PreussenElektra have been locked in a court case for the transfer of 44 TWh of surplus quota from the jointly operated Kruemmel reactor.

PreussenElektra, owned by E.ON, is short in quota to operate its three remaining reactors beyond February.

E.ON on Nov. 11 warned of higher depreciation costs from the purchase of production quota, but ramped up hedging for 2021 and 2022 at its nuclear legacy unit.

A spokeswoman for PreussenElektra told S&P Global Platts Oct. 8 that it acquired a further 3 TWh to allow its Grohnde nuclear power plant to run until the end of January.

Available quota was to stretch to mid-January for the Brokdorf plant and February for Isar 2.

Last year, it acquired 21 TWh for a preliminary price of Eur27.80/MWh from the closed Kruemmel reactor it jointly operated with Vattenfall with court proceedings at the OLG Hamburg court ongoing.

E.ON is calling for a free transfer of 44 TWh.

Vattenfall is also suing Germany at the World Bank's International Centre for Settlement of Investment Disputes (ICSID) for the general terms of the nuclear exit 2011.

RWE and EnBW operate the other three German reactors with three to shut at the end of 2021 and another three at the end of 2022.

German nuclear generation fell from 103 TWh in 2011 to 71 TWh in 2019.