Everyone is doing their analysis of this.
Here’s Goldman’s quick take on the effect of Fukushima on the US energy business. Like many others, they’re bullish on US natural gas.
Nuclear reactor damage caused by the tsunami in Japan reduces the chances of a US nuclear renaissance Damage to the Fukushima Daiichi nuclear plant in Japan as a result of the recent tsunami has added to concerns on the development of new nuclear plants in the US and even the relicensing of select existing reactors.
Low natural gas/power prices, along with delays in CO2 regulations, already weakened new nuclear prospects in the US Few of the companies that filed, in 2005-2008, for potential new reactor licenses moved forward, largely as (1) declines in electricity demand lessened the need for new capacity, (2) development of CO2 regulations face continued political and regulatory challenges, and (3) low natural gas prices – driven by shale gas discoveries – weigh on power prices, negatively impacting economics for new nuclear plants.
SO/SCG may face potential delays in their COL process, while ETR will likely battle state opposition to relicensing existing sites Southern Company (SO, Neutral) and SCANA Corp (SCG, Neutral) received state approvals to develop brownfield nuclear units in Georgia and South Carolina, respectively – but both await federal NRC approvals of their Construction & Operating Licenses (COLs) – with new challenges likely to emerge. ETR’s merchant nuclear assets – especially those in Vermont and New York – still face significant environmental opposition to their relicensing, despite obtaining federal approvals to continue operating.
We reiterate our Cautious view on utilities, preferring names like SRE, PCG & PPL among large caps
We remain underweight the utilities sector, largely on valuation for Regulated Utilities and an expected decline in EPS due to low gas/power prices for Diversified Utilities. SRE, PCG and PPL remain our top large- cap picks, while WEC and PNW remain preferred small/mid-cap names.
Substitution away from nuclear could benefit renewables, gas
Germany, Switzerland and other countries are taking action to suspend nuclear plans or at least reevaluate nuclear power. A possible recalibration of long-term generation mix targets could imply a greater share for renewables. We believe natural gas would be the primary beneficiary of below-expected nuclear generation. COG is our favourite gassy E&P stock.