What are the core statements of the article and which method does it use?  

Jan Emblemsvåg has published an article in The International Journal of Sustainable Energy with the title “What if Germany had invested in nuclear power? A comparison between the German energy policy the last 20 years and an alternative policy of investing in nuclear power“.¹ The article is about Germany’s energy transition policy, which aims to replace nuclear and fossil-based energy with renewable energy sources such as wind, solar, and biomass. The article’s main conclusion is that Germany would have cut its spending on the energy transition by about € 600 billion if it had prolonged the operation of its NPPs instead of accelerating the deployment of renewables. Assuming that new NPPs would also have been built, the spending of the energy transition could have been cut by € 332 billion. Germany should therefore have pursued an energy policy based on keeping and expanding nuclear power. 

Why is this method not tenable?

The author describes his method as a cash flow-based analysis. Cash flow is a term taken from the financial sector to describe the net flow of funds available to a company. It represents the difference between income and expenses and is therefore an important component when assessing a company’s financial performance.  

The author of the article starts by looking at the investments, operation and maintenance expenses for the renewable power generation that has been newly installed since 2002. In a cash flow analysis, these expenses would have to be offset against the revenues from the sale of the generated electricity, i.e., market revenues and subsidies received. Instead, however, the author adds the subsidies for renewable energies to the expenses (quote: “Essentially, the total expenditures of the Energiewende are the sum of the expenditures that the power plant owners have used (...) and the sum of the expenditures that society in addition have used to make the system work, i.e. subsidies, and subtracted any profits“^1,2). The main funding of renewables in his calculations is the feed-in tariff received by owners of renewable installations (see Figure 4)¹.

We can illustrate the fundamental nature of this error using a simple example: Let’s assume that a student buys a car and pays it off in monthly installments of € 300. The parents help to fund the student’s car purchase with € 200 per month. If we follow Emblemsvåg’s logic, the car costs € 500 per month.

In total, Emblemsvåg nominally adds € 309 billion in subsidies for renewables to the expenditure of € 387 billion for the period 2002 until 2022, while he only considers the expenditure when it comes to nuclear power (see³). This flawed calculation then forms the basis of his conclusion regarding the alleged additional costs of the German energy transition; he estimates these costs at approx. € 300 billion compared to a scenario prolonging the operation of NPPs and building new ones, and at € 600 billion compared to a scenario only prolonging the operation of NPPs. 

Since the operators of renewable power plants are the subject of the cash flow analysis and not electricity consumers or the state, this method is fundamentally flawed. It results in double counting the expenditure on the energy transition. Final consumers and the government have borne the bulk of the additional costs of renewable energies in line with the subsidies according to the German Renewable Energy Sources Act (EEG). But these EEG surcharges or government subsidies should not be included in a business-based cash flow calculation and occur at a different level, the macroeconomic level. The analysis attempted by the author should only have considered the level of expenditure for the energy transition without its public financing as carried out, in other analyses⁴.

In principle, a monetary evaluation of the energy transition with or without NPPs should compare complete scenarios that are based on total system costs and a clearly defined area of focus, e.g., the energy system or the national economy, as in the European Commission’s Impact Assessments (see⁵). This requires considering all the changes in technologies and capacities and taking into account all the costs of the energy system and not just a selective technology comparison of the individual cash flows for renewable energies and nuclear power plants as was the case in this article (see⁶).

In this response, we focused solely on examining the underlying method used in the analysis by Emblemsvåg without checking the data and calculations performed in detail. Nevertheless, possible errors can be seen concerning the data used, e.g., the investments in wind power in 2002 seem to be significantly overestimated (by about a factor of four) (see Table 2)¹. However, it does not seem expedient to make a detailed analysis of the data due to the fundamentally flawed method.

Notes and references

1. Emblemsvag, J. (2024): What if Germany had invested in nuclear power? A comparison between the German energy policy the last 20 years and an alternative policy of investing in nuclear power. International Journal of Sustainable Energy. Vol. 43, No. 1, 2355642.
2. The author does not take into account government funding of nuclear power, although, depending on the source, this is also very significant. Extensive literature is available on the government’s funding of renewables compared to nuclear power, see, for example, Deutscher Bundestag (2021): Strom aus Kernenergie: Kosten und Subventionen. Wissenschaftliche Dienste und Schrems, I.; Wieland, P. (2021): Gesellschaftliche Kosten von Kohlestrom sind heute bis zu dreimal so teuer wie Kosten von Strom aus erneuerbaren Energien. Forum Ökologisch-Soziale Marktwirtschaft (FÖS). The article only addresses the funding of NPPs in one respect, namely the financing of the plants. Constructing NPPs is extremely capital-intensive and characterized by long construction times, which results in high capital costs. The fact that this significantly reduces the economic efficiency of NPPs is addressed in the article, but not included in the calculation (on the role played by construction costs in nuclear power plants, see Lazard (2024): LCOE Levelized cost of energy and World Nuclear Association (2023): Economics of Nuclear Power).
3. At one point, the author states the following: “Obviously, some of the subsidies would cover direct expenditures and some would have resulted in profits, but we do not know how much“ (see¹). However, he only regards those payments as double counting that, in his opinion, affect all electricity producers (i.e., nuclear power and renewables) equally and therefore does not take them into account. It is therefore incomprehensible why he then adds the subsidies for renewable energies to their expenses. Especially since he also writes correctly at another point that expenditure must be offset against all income from the sale of electricity and subsidies and should not be added up, which he then proceeds to do. Furthermore, it becomes clear that he only considers the expenses for nuclear power, but regards the profits made by renewable plants as expenses that are attributed to them.
4. IRENA and CEM (2014): ‘The socio-economic benefits of solar and wind: an econValue report’. Abu Dhabi 2014. And: Breitschopf, B., Held, A. (2014) Guidelines for assessing costs and benefits of RET deployment, IEE DiaCore Project.
5. SWD(2021) 621 final: Impact Assessment accompanying the Proposal for a Directive of the European Parliament and the Council amending Directive (EU) 2018/2001 of the European Parliament and of the Council,  Regulation (EU) 2018/1999 of the European Parliament and of the Council and Directive 98/70/EC of the European Parliament and of the Council  as regards the promotion of energy from renewable sources, and repealing Council Directive (EU) 2015/652.
6. This type of system analysis based on expenditure can be found in Thellufsen, J.Z.; et al. (2024): Cost and system effects of nuclear power in carbon-neutral energy systems. Applied Energy, Volume 371, 1 October 2024, 123705.