Spain, Shunning Nuclear Power, Ends Up Hooked on Natural Gas By...

Spain, Shunning Nuclear Power, Ends Up Hooked on Natural Gas

By Kristian Rix and Juan Pablo Spinetto

Oct. 11 (Bloomberg) -- Spain's Prime Minister Jose Luis Rodriguez Zapatero is a self-proclaimed anti-nuclear warrior.

When the aging Jose Cabrera nuclear reactor, about 100 kilometers (63 miles) east of Madrid, was shuttered in April, Zapatero refused to consider a new atomic plant. Instead, the reactor will be replaced with a generator that burns North African gas. Zapatero pledged last month to unveil a plan by the elections in 2008 to phase out all nuclear reactors.

Four decades after dictator General Francisco Franco bet on nuclear power to reduce dependence on foreign energy, Spain is Western Europe's fastest-growing natural gas importer. The shift has come with a steep price tag: The cost of energy imports rose 66 percent in two years to 32.1 billion euros ($41 billion) in 2005, the National Statistics Office in Madrid said.

``We are putting ourselves at the mercy of gas,'' Pedro Rivero, the chairman of Madrid-based Unesa, a utilities' trade group, said in an interview last month.

Gas-fed reactors produce power for about 35 euros a megawatt-hour compared with 14 euros for nuclear plants, according to Madrid-based Union Fenosa SA, owner of the Jose Cabrera plant. Spain gets 75 percent of its energy from fossil fuels, more than the 50 percent average for the European Union.

Zapatero is bucking the trend in Europe. France and Finland are building nuclear reactors to replace aging units. U.K. Prime Minister Tony Blair in July supported building a new generation of nuclear power plants.

Waste Concerns

Spain abandoned new construction of nuclear power stations in the 1980s, because of opposition from the Socialists. In 1984, a Socialist government led by Prime Minister Felipe Gonzalez stopped three almost-finished units.

The decision was made five years after the accident at Three Mile Island in Pennsylvania. More nations followed suit after the Chernobyl accident in 1986.

``We don't need nuclear power,'' said Lawrence Sudlow, a spokesman for Friends of the Earth in Spain. ``People here fight against it to stop the lunacy which creates waste for thousands of years.''

Only 4 percent of Spaniards want more nuclear power, the second-lowest among the 25-nation EU, after Greece.

Gas-fueled stations this year passed nuclear units as the second-largest source of power in Spain, supplying 25 percent of the country's electricity, up from 6 percent in 2003. Nuclear supplies 23 percent and coal 27 percent, according to Madrid- based Red Electrica de Espana SA, the network operator. About 75 gas-fed plants are set to dot the country by 2011.

Power Demand

Power demand is forecast to outstrip the average EU growth in 2006 for the 13th consecutive year, and remain above-average through 2011. The government expects annual demand to increase between 3.5 percent and 3.8 percent until then.

``Dependence on gas is not going to fall anytime soon,'' said Rafael Villaseca, chief executive officer of Gas Natural SDG SA, Spain's largest gas supplier, at an energy conference in Madrid in May. ``Nuclear power, with all its drawbacks, could provide a solution to this problem.''

Spain imported 70 percent of its gas from Nigeria and North Africa last year, at a time when prices rose 70 percent. Atomic energy may be the simplest way to reduce Spain's dependence on gas imports, said Jose Carlos Diez, chief economist at Madrid- based Intermoney SA, a brokerage and fund manager.

``Nuclear power seems the least bad solution to the problem,'' he said.

Nuclear Reduction

Spain began its push into nuclear energy in 1965, 10 years before Franco died. Three nuclear plants were built by 1971, with seven more completed in the next 16 years.

The Jose Cabrera plant was Spain's smallest, with an installed capacity of 166 megawatts. It's the second to be closed; the Vandellos-1 unit was destroyed by fire in 1989.

The 466-megwatt Santa Maria de Garona operating license expires in 2009. Endesa SA and Iberdrola SA, the plant's operators, have asked Spain's nuclear regulator to extend the permit until 2019. The Industry Ministry declined to comment.

Economic growth will suffer without nuclear power, said Loyola de Palacio, EU energy commissioner until November 2004. She campaigned for the use of nuclear power to curb Europe's reliance on Russian and North African gas. She is now the foreign affairs spokeswoman for the opposition Partido Popular.

Rising energy costs ``will undoubtedly knock a few tenths of a percentage point from growth,'' this year, she said in an interview.

Growing dependence on natural gas is also contributing to rising emissions of carbon dioxide. Spain, Europe's fastest- growing air polluter, produced 5 percent more carbon dioxide last year than allowed under permits granted through an EU emissions program, the government has said.

Zapatero, 46, said on Sept. 20 that his Socialist government would prepare a plan before the end of the parliamentary term in 2008 to phase out atomic plants. He says he wants renewable sources such as wind parks to make up about 13 percent of electricity demand by 2012, up from 5.7 percent last year.

``We are betting on a progressive reduction of the weight of nuclear power in our energy mix,'' Zapatero said. ``We want a more responsible, more sustainable use of energy.''