Germany's nuclear exit positive for renewables

31st May 2011 10:39

Germany's decision to exit all of its nuclear power plants marks a clear win for renewable energy, according to Matrix, which highlights a number of UK companies that could benefit.The German government have announced that it will close all 17 nuclear plants in the country by 2022, aiming to replace around 20% of its total electricity consumption with emissions-free sources of energy."The decision by the German government to close all its nuclear plant by 2022 is a strong long-term positive for renewable generally," said analyst Adam Forsyth.He notes that if this move prompts greater activity in North Sea offshore wind operations, it could lead to lower costs, which could help London-listed energy groups Centrica and Scottish & Southern Energy (SSE). Drax's biomass ambitions could also benefit as "as the attractions of a baseload non-nuclear option increase in the eyes of UK policymakers."Replacement generation technology could also be gas-fired, which the broker thinks could push up gas prices in the longer term (and in turn, electricity prices), helping the likes of generators SSE and Drax. Centrica may be hindered as it is "long in downstream supply."Barclays Capital analyst Thorsten Polleit said that "The government's plan, which must still find legislative approval, was welcomed by environmentalists and is widely expected to be popular among voters."However, Polleit warns that "scepticism is being expressed by industry representatives and European partner countries. Some are of the opinion that the decision could harm economic growth in Germany and may force the country to import nuclear power from abroad, thereby potentially raising the cost of energy across the continent." ---BC