Today’s alternative energy news is dominated by the German government’s decision to phase out nuclear power generation in the country. If the decision holds up, it could be very good news for the solar PV industry, which is suffering from rising inventories and falling prices.

Following the disaster at Japan’s Fukushima Daiichi nuclear power plant, Germany shut down seven of its oldest nuclear power plants until they could be inspected. Now those plants, and the other 10 in Germany’s nuclear fleet will all shut down by 2022.

The impact on uranium stocks has been immediate and ugly. Uranium Energy Corp. (AMEX: UEC) shares are down nearly -6% this morning, to $3.11, within a 52-week range of $2.11-$7.48. Ur Energy Inc. (AMEX: URG) shares are off nearly -8%, to $1.66, in a 52-week range of $0.73-$3.37. Uranerz Energy Corp. (AMEX: URZ) shares are off -8.5%, to $3.12, in a 52-week range of $0.87-$5.93. Uranium Resources, Inc. (NASDAQ: URRE) is down more than -4%, to $1.86, in a 52-week range of $1.82-$3.98.

Other companies that could feel some pressure from Germany’s decision include General Electric Co. (NYSE: GE), Toshiba/Westinghouse, and France’s Areva SA (OTC: ARVCY).

Germany’s decision follows a similar decision last week by Switzerland’s government. It’s hard to determine what part of the decision is driven by political concerns, but Germany’s ruling political coalition has come under heavy attack for its pro-nuclear stance and recently has suffered some electoral defeats that have been attributed at least partly to the coalition’s tolerance for nuclear power.

Germany’s nuclear 17 plants generate about 23% of the country’s electricity, whereas Swiss nukes produce about 40% of that country’s electricity. The Germans plan to cut electricity consumption by 10% by 2020 and to double the share of renewable generation to 35% in the same period. Germany’s nuclear operators include RWE AG, E.ON AG, EnBW Energie B-W, and Sweden’s Vattenfall. None is likely to accept the new policy without a fight.

The Obama administration has reiterated its commitment to nuclear development and Japan has said that it would increase its investment in renewables, but would continue to rely on nukes for the immediate future.

News of Germany’s decision lit a fire under most solar PV stocks today, as expectations for more demand from Germany have surfaced. Solar PV maker JA Solar Holdings, Co., Ltd. (NASDAQ: JASO) shares are up almost 6.5%, to $6.03, in a 52-week range of $4.22-$10.24.  First Solar Inc. (NASDAQ: FSLR) shares are up about 2%, to $123.53, in a 52-week range of $100.19-$175.45. LDK Solar Co., Ltd. (NYSE: LDK) shares are up more than 7%, to $7.53, in a 52-week range of $4.97-$15.10. Suntech Power Holdings Col., Ltd. (NYSE: STP) shares are up more than 5%, to $8.47, in a 52-week range of $7.05-$11.41. Yingli Green Energy HOlding Co. Ltd. (NYSE: YGE) shares are up almost 6%, to $9.26, in a 52-week range of $8.20-$14.29. Trina Solar Ltd. (NYSE: TSL) shares are up nearly 4%, to $22.85, in a 52-week range of $15.09-$31.89. The Guggenheim Solar ETF (NYSE: TAN) is up more than 5%, to $7.45, in a 52-week range of $6.02-$9.34.

The boost to solar stocks follows a report last week from IMS Research predicting that European solar PV installations will “fall considerably in the next 3-5 years.”  The research was completed before either Switzerland or Germany announced their exit from nuclear generation. And IMS does not take at face value any government’s promises for increases in solar PV installations.

In Germany, the decision to eliminate nuclear generation should lead to an increase in solar PV installations by the country that once led the world in new solar capacity. But will the country re-adjust its feed-in tariffs upward again to attract investment? Or will it decide that with the elimination of nuclear power, new solar capacity will have to stand on its own regarding pricing? Or will the nukes be replaced by coal- or gas-fired generation?

Germany can probably afford to boost its incentives for solar PV back to near previous levels. It may be, though, that the government chooses to let solar PV generation stand on its own, calculating that lower consumption and falling panel prices will help even out prices. The country could also more rigidly apply carbon emissions limits and boost carbon pricing, making coal or gas more expensive.

From a policy perspective, Germany’s decision to give up nuclear power could be a real game changer. If the country can cost-effectively replace its nuclear generation with renewables, it might be that anything’s possible.

Paul Ausick

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