German Chancellor Angela Merkel’s coalition has set a final date of 2022 for the country’s remaining reactors to shut down. Closed reactors to be shut down represent 25% of German electricity production capacity. This could give support for higher electricity prices for longer term, although it should be Neutral for CEZ as this was expected and should be therefore priced in.
A tax on nuclear reactors will remain even as the shutdown proceeds, German Environment Minister Norbert Roettgen told reporters following late-evening coalition talks in Berlin. “The seven oldest reactors that have been placed under a moratorium and the Kruemmel nuclear power plant won’t go back online,” Roettgen said. A second group of six nuclear power plants will go offline at the end of 2021 at the latest and the three most modern power plants will go offline 2022 at the latest.”
Merkel in March said she sought to accelerate the shutdown of Germany’s atomic power plants following Japan’s Fukushima disaster, the worst nuclear crisis since 1986. The decision reversed a 2010 plan to extend the operation of the facilities by an average of 12 years.
German 2011 electricity prices rose for a second day to 60.45 EUR/MWh after yesterday's announcement about the exit date. CEO Martin Roman of CEZ said the price of electricity will rise if Germany shuts off its most economical source. He added that it is too early to talk about any rate exact figures, even for the next year. Asked about NPP Temelín, he said the German decision changes nothing about the enlargement, which might be slightly positive for the stock.
According to KBC Securities, the German decision to leave the nuclear-fuel tax is positive for electricity prices whilst the rest was broadly expected by the market. Due to its hedging policy, CEZ is unable to monetize current increase in electricity prices. Positive long-term outlook should be largely in the price by now. KBCS see the news as slightly positive for the stock.
(Source: Bloomberg, KBC Securities)