Last updated: March 15, 2011 6:16 pm

Electricity prices jump in Europe

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European electricity prices soared after Germany made seven reactors idle, or a third of the country’s nuclear capacity, in the wake of Japan’s atomic crisis.

The move by Berlin was the clearest sign of a broader rethink in Europe of the role of nuclear power. Nobuo Tanaka, the veteran Japanese diplomat who heads the International Energy Agency, acknowledged that nuclear might “not play as big a role” as it had previously predicted.

The nuclear disaster in Japan is “a turning point in the history of technology-based society”, Angela Merkel, chancellor, said, after issuing a decree to suspend all nuclear plants built before 1980 forthree months. Ms Merkel last year extended the life of nuclear power in Germany from 2022 to 2036 after talks with utilities.

The cost of electricity in Germany, the European benchmark, immediately rose as utilities are likely to burn more expensive natural gas and thermal coal to bridge the shortfall in electricity. Berlin left the door open to reconnect the power stations to the grid, although some plants could shut forever.

The cost of baseload power – the kind of electricity supplied permanently to the grid – for delivery in April in Germany jumped as much as 17.9 per cent to a session high of €64.25 per megawatt hour.

The jump on Tuesday was the biggest one-day move since 2003. One-month ahead prices have risen 27.9 per cent since the earthquake and tsunami struck Japan on Friday.

“These day-on-day gains are huge, and will impact markets all over Europe,” said Zoe Double, at ICIS Heren, the energy markets data provider, in London.

Prices across other markets, including France, and Spain, also surged.

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