Germany’s nuclear energy regrets

“Don’t follow Germany on energy policy.” That was the Center’s most recent, of many, warnings over the years to Minnesotans, about copying the Germans move towards 100 percent renewable or clean power. Germany by 2035. Minnesota by 2040.

That is the bad news. The worse news is that Germany effectively banned the cleanest of electricity generation sources. Clean from a CO₂ perspective. That being nuclear. All existing plants.

The good news, compared to Germany, is that Minnesota has only banned the building of new nuclear power plants. The better news is that this ban will be revisited, as part of a state government funded study, to be completed by the Great Plains Institute on January 30^th, 2027.

Hopefully this study will take heed of Germany’s recent nuclear energy regrets, as set out below, especially as former Minnesota governor Jesse Ventura once warned:

“Learn from history or you’re doomed to repeat it.”

Context

“It was a serious strategic mistake to exit nuclear energy,” admitted Friedrich Merz, the Chancellor of Germany, on January 15^th of this year. He added that: “We set ourselves a goal that we now have to correct, but we simply don’t have enough energy generation capacity.”

“We’re now making the most expensive energy transition in the entire world,” said Chancellor Merz. “I don’t know of a second country that makes it as difficult and as expensive for itself as Germany does.” The last three of Germany’s nuclear reactors were shut down in April 2023.

Merz’s long-ruling Christian Democratic Union first decided to phase out nuclear energy in 1998, reversed it in 2009, and then aggressively reinstituted it in 2011 in the wake of Fukushima. Four reactors were closed between 1998 and 2009, and a whopping fifteen since 2011.

Policies

The worldview that drove this, according to the World Nuclear Association, is Energiewende. That being the transition of electricity generation, from mostly fossil fuels and nuclear, to so called renewables. Clean Energy Wire documents the timeline from 1973 to 2020.

Notable Energiewende milestones from the 20^th century were: (1973) anti-nuclear movement born with the slogan of “Atomkraft? Nein danke!”; (1979) Green Party founded to replace nuclear with renewables; (1986) Chernobyl disaster and Der Spiegel’s cover story on global warming.

Key Energiewende milestones from the 21^st century were: (2000) Renewable Energy Act passed and “nuclear consensus” reached to phase out by 2022; (2010) “nuclear consensus” reversed; (2011) “nuclear consensus” restored; (2018) Coal Exit Path; and (2019) Climate Action Law passed.

Consequences

The first chart shows the declines in the electricity generation source ratios of both fossil fuels and nuclear as well as the rise of renewables. The nuclear ratio is significantly reduced from 30% in 1996 to 20% in 2010. It then falls to 10% in 2021 and collapses to 0% in 2023.

The second chart tracks electricity generation in total output as well as for nuclear, fossil fuels and renewables. Renewables overtake nuclear from 2012 and dramatically diverge in opposite directions onwards. Total electricity supply has consistently been in decline since 2017.

The third chart demonstrates how prices are driven by marginal costs not total costs. Relatively cheaper nuclear, compared to renewables, declines every year from 2006 to 2023, 104.5 to 4.5, thus inflating electricity Harmonized Index of Consumer Prices (HICP) from 129 to 303.

The fourth chart illustrates electricity pulling up all HICP in the 21^st century. The former goes from 100 in 2000 to 303 in 2023, with the latter going from 105 to 167. Electricity, as an input into everything, fuels cost-push inflation, just as currency inflates demand-pull.

Economics

Mainstream static economics teaches that taxpayer subsidies, such as to German renewables, will increase supply and lower prices. It also teaches that rising input costs, say in such renewables, will decrease supply and escalate prices. Dynamic incentives are the missing link.

Free market economics, like in Murray Rothbard’s Power and Market, argue that subsidies will cause both effects, of increasing supply and rising input costs. But the latter effect will tend to overpower the former. Thus, prices will tend to be high and rising as time goes by.

The reasons for this are: 1.) inefficient businesses are the ones who are incentivized to seek subsidies or rent seek; 2.) these subsidies incentivize such businesses to stay inefficient or worsen; 3.) more resources are diverted into #1, leading to more #2. Rinse and repeat.

Coda

President Trump issued four executive orders in 2025, aimed at jump-starting American nuclear energy. In summary, these “focus primarily on rapid deployment of advanced nuclear reactors while also providing support and further study for other parts of the fuel cycle.”

Robert Bradley, in Nuclear Power: A Free Market Approach, notes: “The past is a sunk cost. Currently operating nuclear plants can be presumed to be economical. Regarding new capacity, [they] have not demonstrated their economic viability versus other forms of thermal generation.”

Germany should have properly applied the precautionary principle and not shutdown nuclear. And, although free markets are better than government fiat, some second best policy choices are better than others. Thus, new or old nuclear should be built or rebuilt, for as Julian Simon once wrote:

“Nuclear power is fundamental to a discussion of energy because it establishes the long-run ceiling to energy costs. No matter how much any other source of energy costs us, we can turn to nuclear power at any time to supply virtually all our energy needs for a very long time.”

“The opposition to it is mainly ideological and political. … The aim of [which] is not increasing the availability of energy and consumer benefits, but decreasing the use of energy for supposed environmental gains and beliefs about the morality of simple living.”