German utility shares slump on nuclear shut down

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German utility shares slump on nuclear shut down

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Shares of German energy producers, RWE, E.ON, Vattenfall and EnBW, declined on Monday after the announcement that Berlin is to shut all the country’s nuclear reactors by 2022.

That policy reversal comes after the Fukushima disaster in Japan.

Germany’s largest power provider RWE, which had suggested ending nuclear power in 2025, signalled its opposition to the deal and may launch a legal challenge. French nuclear plant builder Areva also saw its shares fall.

But the stock of renewable energy companies gained. Berlin has said it wants to double the share of renewable energy sources to 35 percent by 2020 and cut electricity usage by 10 percent by that date. Major gainers included SolarWorld, Q-Cells and Renewable Energy Co.

The German decision still needs to go through parliament and leaders of the opposition Social Democrats and the Greens were present at parts of the meeting to enable a broad consensus.

The governing coalition wants to keep a nuclear tax, which was expected to raise 2.3 billion euros a year from this year, but so far has not been levied. With the immediate closure of eight plants it will raise less than envisaged.

The government had considered dropping the tax in return for the utilities supporting and not suing the government over an early exit, but in the end decided to keep it.