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Germany's phase-out: Siemens follows

Nuclear Monitor Issue: 
LAKA Foundation

Europe's largest engineering company, Siemens, decided to withdraw entirely from the nuclear industry. Chief executive Peter Loescher told Spiegel magazine it was the firm's answer to "the clear positioning of German society and politics for a pullout from nuclear energy". Siemens was responsible for building all 17 of Germany's existing nuclear power plants, and some abroad.

Siemens has been active in nuclear power for decades, for the most part under the name of KWU (Kraftwerk Union AG). KWU was established on April 1, 1969, by Siemens and another Germany firm AEG. The first (foreign) order was signed on that same day, the construction of the 450MW PWR at Borssele, The Netherlands. As a matter of fact an option for the construction of a second reactor was signed too, but never materialized. Other foreign reactor construction contracts signed were with Brazil, Iran, Argentina, Switzerland and Spain

On January 1, 1977 Siemens bought the AEG 50% KWU share and 10 years later, on October 1, 1987 KWU ceased of being an independent company and became part of Siemens concern.

In early 1989 Siemens started talks with Framatome, the French builder of PWRs. Which resulted in the joint venture Nuclear Power International (NPI). In 1991 a technical reactor concept was decided called the European Pressurized Water Reactor (EPR). "EDF and the major German utilities decided early 1992 to support the strategy and streamline their separate development of future reactors on the basis of this Franco-German cooperation", as Jean-Claude Leny Chairman and CEO of  Framatome put it in a March 1993 article in the German industry magazine Atomwirtschaft. The key milestone in the marketing of the EPR would be 1998 when first pouring of concrete was expected for the first EPR. EDF would place orders to Framatome and "hopefully" the German utilities to Siemens for EPR units to be built in Germany. "Framatome, Siemens and NPI will market and supply the EPR export markets", which was considered to be the main market.

Well as we know it didn't work out as planned.

In August 2000, Framatome and Siemens agreed to a new joint venture formally merging their nuclear activities into a new company called Framatome ANP, subsequently renamed Areva NP. Framatome would hold 66 per cent of the stock and Siemens the rest.

Continued delays to EDF’s order led Areva NP to switch to Finland as the focus for its marketing. In May 2002, the Finnish Parliament approved the construction of a fifth nuclear unit in Finland. In December 2003, the Finnish utility TVO signed a turnkey deal with Areva NP for a 1600MW EPR at a cost, including interest during construction and two fuel charges  of €3bn with first power first half 2009. Again, that didn't work out as planned: online not before second half of 2013 and costs expected to double.

In 2009 Siemens used an option to exit Areva SA. But an arbitration tribunal in May this year ordered Siemens to pay 648 million euro (more than US$900 million) to Areva after it failed to meet contractual obligations.

Due to the decision to withdraw entirely from nuclear, Siemens will cancel the long-planned joint-venture with Russian nuclear-power company Rosatom Corp. in the field of reactors. although Mr Loescher said he would still seek to work with their partner "in other fields". There are no financial implications linked to Siemens's retreat, according to spokesman Alfons Benzinger.

The German government's decision marked a complete U-turn by the chancellor, who only in September 2010 had announced that the life of existing nuclear plants would be extended by an average of 12 years. Siemen's move, announced on September 18, is also a turnaround. In 2009, the firm withdrew from the joint venture with Areva, because the German firm had ambitions to expand its own competence to build entire nuclear plants. "In view of global climate change and the increasing power demand worldwide, for us nuclear energy remains an essential part of a sustainable energy mix," Mr Loescher had said at the time.

Siemens has gradually scaled back its nuclear-power operations in recent years, after helping build some of the world's largest reactors in the latter part of the last century. While Siemens is pushing renewable-energy sources such as wind turbines and solar power, the company will continue to build steam turbines that can be used both in conventional as well as nuclear facilities.

The German engineering company makes products including high-speed trains, medical scanners, and factory-automation equipment. The entire energy division is Siemens's second- largest by revenue, generating 6.77 billion euros ($9.34 billion) in the most recent quarter.

Sources: Groene Amsterdammer (NL), 16 November 1977 /  Financial Times, 28 February 1989 / Frankfurter Allgemeine Zeitung, 14 April 1989 / Atomwirtschaft,: Franco-German Cooperation in Nuclear Development, March 1993 / Nuclear News ‘Siemens/Framatome nuclear merger completed’ August 2000 /  Nuclear Monitor 719/720, 12 November 2010 / Bloomberg, 18 September 2011 / BBC News, 18 September 2011
Contact: WISE Russia