Germany's nuclear power plants will be given an average of 12 extra years of production time and utility companies will face new charges, stripping them of billions in expected additional profits.
Following months of public wrangling, chancellor Angela Merkel, environment minister Norbert Roettgen, economy minister Rainer Bruederle, finance minister Wolfgang Schaeuble and other leaders of the centre-right coalition reached an agreement on Sunday night after a marathon session at the chancellery lasting almost 10 hours.
The country's 17 nuclear power plants will remain active for 12 more years on average, with older plants getting an extra eight years and more recent ones 14 additional years beyond 2021, Mr Roettgen and Mr Bruederle said at an improvised late night news conference at the chancellery, German news agency dapd said.
Mrs Merkel will later brief the media on more details of the new agreement.
She said earlier this week an extra 10 to 15 years of production time beyond 2021 was possible. A previous centre-left government decided in 2000 to shut down all nuclear plants by 2021 - a decision she wanted to reverse so Germany could have more leeway as it switched to renewable energies.
The coalition leaders also agreed on a new levy to tax the utility companies' additional profits. The companies will have to pay an annual fuel tax aimed at raising £2 billion starting next year, but will now also have to contribute to a special fund to boost renewable energies, meant to raise billions, dapd reported.
Hundreds of people protested outside the chancellery in Berlin against the planned extension of the nuclear power plants' lifetime throughout Sunday. Some carried banners saying "Nuclear power: Only the risk is secured".
The main opposition parties, the Social Democrats and the Greens, staunchly oppose the idea of keeping the plants longer online, citing the safety risk and the need to switch to renewable energies.
Opposition leader Sigmar Gabriel said the agreement marked "a black day for Germany's energy policy" as the coalition government caved in to the pressure of the utility companies.
The project was even controversial within Mrs Merkel's government. Mr Bruederle called for an extension of up to 20 years, but Mr Roettgen was sceptical on longer production times. Mrs Merkel's coalition, however, still needs to get parliamentary approval for the new agreement.