Press release

Nuclear power plants are not amortized and nuclear generation is currently incurring losses

June 03, 2021

Foro Nuclear comments on the draft Law to share the benefits of CO2 costs among all consumers and reduce the bill.

Nuclear power plants are not amortized. Every year they invest around 300 million Euro. Nuclear generation is currently incurring losses due to a disproportionate, discriminatory and confiscatory taxation.

The draft Law, the current taxes and levies and the future market context increase the financial suffocation of the nuclear fleet and drive it to the cessation of its activity.

Foro Nuclear expresses its perplexity at the claims that nuclear power plants are amortized and enjoy windfall profits; as shown by the audited balances and income statements from owner companies of nuclear power plants, which the Ministry for the Ecological Transition and the Demographic Challenge are aware of, the current fixed tied-up capital pending amortization is over € 5.5 billion, with over € 3 billion invested only in the past ten years.

The draft Law, the current taxes and levies and the future market context increase the financial suffocation of the nuclear fleet and drive it to the cessation of its activity

As a consequence of the low price of electricity, in 2020 nuclear power plants had a negative cash flow of around € 500 million, according to PwC’s report for Foro Nuclear, and losses above € 1 billion. With the draft Law presented to Congress, this negative cash flow would have been significantly increased as the price of CO2 emission rights would have been around 25 € / ton.

With the draft bill as a reference point, since 2005 and up to 2021 taxes on nuclear electric generation sites have increased by 20 €/MWh, which amounts to 60 % of their revenues for 2020.

Nuclear power plants have been requesting a revision of their extremely high tax burden for a long time. They demand an adjusted but reasonable retribution in order to afford a technology that is essential to the decarbonization of electricity generation, as contemplated in the Integrated National Energy and Climate Plan of its activity 2021-2030 (INECP). The draft Law goes in the opposite direction and drives the nuclear fleet to cessation.

Nuclear power plants have been requesting a revision of their extremely high tax burden for a long time

Regarding the explanations offered after the Council of Ministers on the draft Law to share the benefit of CO2 costs with all consumers and reduce the electricity bill, and with respect to the nuclear sector, the following must be pointed out:

  • Electric production from nuclear sources is and has been, for the past decade, the first source of electric generation. Its contribution is over one fifth of the electric energy consumed in Spain.
  • It offers remarkable regularity and reliability as a firm energy source, which provides great stability to the electric system.
  • As a source that generates no CO2 (one third of the emissions-free electric generation in our country), nuclear power is the source with the highest contribution to the decarbonization pursued by the 2021-2030 INECP, whose main goal –the goal of the entire energy and clime strategy of the Spanish Government– is the decarbonization of the economy by 2050 with a strict reduction of CO2 emissions in order to fulfil the objectives set by the European Union.
  • For a few years now –and despite its excellent operation– the financial result of the nuclear fleet has been reduced to the point where it has incurred losses for a great part of the past fiscal years. In these years the offers that set the marginal price added the price of CO2, in addition to the excessive tax burden. This fact was aggravated in 2020, when it not only incurred losses but suffered a negative cash flow.
  • Additionally, the context of future market drives it to technical bankruptcy, with an accumulated cash flow destruction of € 2.4 billion in the next fiscal years, which will make it impossible to recover future investments of € 3 billion.
  • The amortization of nuclear power plants is not complete. In fact, from this time to the end of its operation it will be necessary to invest around €3 billion to maintain the plants in optimal safety and reliability conditions.
  • Since 2005, the increase of taxes and levies has been close to 20 €/MWh.
  • Since the agreement for the orderly shutdown of the nuclear fleet, fiscal pressure has increased with new autonomous taxes such as in Catalonia, which taxes electric production from nuclear sources, and with the extension to all nuclear power plants of the tax that finances the responder service provided by the State Security Forces and Bodies.
  • As a consequence of this agreement, the Enresa tax has increased around 20%.
  • For the mid and long term, it is expected that prices in the wholesale market will show a downward trend during a great amount of hours in the year, given the great penetration of renewable energies with a variable cost tending to zero. This plunges the marginal price to very inferior values from current ones. The draft Law proposal seems to be a response to a circumstantial situation of rising prices that does not correspond to the aforementioned mid- and long-term tendency.
  • Because of everything that has been stated above, the tax on nuclear generation does not correspond to the wrongly named “windfall profits”.
  • The draft Law, the current taxes and levies and the future market context increase the financial suffocation of the nuclear fleet and drive it to the cessation of its activity. It would not only affect its contribution to the electric system but also to its capacity to maintain highly qualified jobs. This presents a risk to the supporting companies that are essential to our country’s industrial sector.
  • Along with this, this draft Law leads to a loss of the competitivity of Spanish nuclear power plants in comparison to those in France as a bordering country.
  • To avoid this, it is necessary to establish a regulated scheme with the nuclear sector that guarantees an adjusted but sufficient retribution, making it possible to maintain the activity, especially its economic viability up to the dates agreed by the nuclear shutdown protocol.