Ruling on a case brought by Swedish group Vattenfall, the constitutional court took aim at a payout condition set by Berlin in 2018 that would essentially require energy companies to make the change first before knowing how much compensation they would receive.

Judges in Karlsruhe urged the government to "revise the regulation as soon as possible", saying the 2018 amendment to nuclear energy legislation, which is still not in force, was tainted by irregularities.

Chancellor Angela Merkel's government, which had earlier championed atomic power, decided after the Fukushima disaster to immediately close eight of Germany's oldest nuclear plants and to shutter the other nine by 2022.

Power companies dismayed by the nuclear U-turn had immediately sued and won a court order for government compensation.

Berlin in 2018 then set out conditions for a payout which would run to hundreds of millions of euros. But the conditions have now been deemed inadequate by the court.

As it stands, power companies are required to make an effort to sell off the rest of their nuclear energy assets before the compensation they will receive can be determined by the state.

"What is unreasonable here is that the plaintiffs cannot know at the point of negotiations what kind of conditions they must accept, and the regulation therefore requires them to either accept potentially unreasonable conditions or risk leaving empty handed," said the court.

While the ruling would not disrupt the timetable for the end to atomic power, it could complicate the exit due to complete in 2022.

- 'Substantial improvements' -

Vattenfall welcomed the ruling, saying the 2018 amendment to nuclear energy legislation "did not even begin to meet the requirements of the constitutional court" and that "new regulation requires substantial improvements".

It said it deserved better compensation for electricity not produced at its two atomic power stations in Kruemmel and Brunsbuettel, both in northern Germany.

The company said that the law "further intensified the massive distortions of competition between energy suppliers" that were already in play due to Germany's phasing out of nuclear power.

RWE, Germany's largest energy supplier, also welcomed the Karlsruhe court's decision, which said that it strengthens energy generators' rights to compensation.

RWE had so far been expecting around half a billion euros in compensation, the group said on Thursday.

Environment Minister Svenja Schulze said the government respects the decision, and that it will "thoroughly analyse the ruling and swiftly initiate a legal regulation that meets the requirements of the court."

While environmental issues have long been mainstream in Germany, and Merkel herself once nicknamed the "climate chancellor", the country's exit from nuclear energy ironically means it will rely more on fossil fuels from 2022 as sustainable power will still need time to fill the nuclear vaccuum.

Germany has pencilled an exit from coal power in 2038, a drawn-out retreat that has raised ire from environmentalist groups.

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