Japan's nuclear shift a boost for renewables Japan's decision to phase out nuclear power has sent shockwaves through the energy industry, and could affect everything from global gas prices to the business of making and selling solar panels. The move could provide a significant boost to a renewable energy industry that has been hit by a glut in supply, falling equipment prices and uncertainty over US and European subsidies. IN Utilities Also, the expected increase in Japan's appetite for liquefied natural gas will have far-reaching implications for a market that has seen strong growth in the past decade. "Gas has a quite a significant future while Japan decides what other sources of energy it will replace nuclear with," says Martin Houston, chief operating officer of BG Group, the oil and gas company that is a major LNG producer and trader. The meltdown at Japan's Fukushima nuclear plant last year has already had a big effect on flows of LNG, a form of supercooled gas that is exported in liquid form on tankers. As Japan closed its surviving reactors, its LNG imports rose from about 70 million tonnes per annum before the accident to 77 mtpa last year, and could total 83 mpta this year, according to BG. And as the nuclear phase-out takes hold, Japan's thirst for LNG will stay at elevated levels. "There's a lot of new LNG supply coming on line at the end of the decade in places like the US, east Africa and the eastern Mediterranean, so more Japanese demand is going to be good for the industry," says Frank Harris, head of LNG at consultancy Wood Mackenzie. But higher Japanese demand will probably mean higher gas prices - a prospect that could make life difficult for proponents of a gas-based energy system, such as the UK chancellor George Osborne. "This could be George Osborne's worst nightmare," says Michael Liebreich, chief executive of Bloomberg New Energy Finance, the clean energy data group. It casts doubt on the notion that gas prices will be coming down any time soon, because there's going to be this huge new slug of demand in the world's third-largest economy. The shift away from nuclear could also encourage Japanese trading houses to invest directly in energy assets - a trend that has already emerged in the post-Fukushima era: last month, for example, Sumitomo Corp said it would invest about $2bn in shale oilfields in the US. "[As nuclear is phased out], we may see Japan Inc becoming more active, taking positions in upstream assets to give them more control and flexibility," Mr Harris says. But the biggest effect will probably be on the renewables industry. The Japanese move will increase demand for equipment made by companies such as Denmark's Vestas, the world's biggest wind turbine manufacturer by sales, which already accounts for about a quarter of Japan's wind installations. "I believe you will see more countries moving down this road now that a country the size of Japan has taken this decision," says Morten Albaek, a senior vice-president, global marketing, at Vestas. "When the third-largest economy takes such a bold step it will be an inspiration," he says, adding if anyone had said two years ago that both Germany and Japan were going to phase out nuclear power, they would have been regarded as "the most naive academic creatures." But others say that it is unlikely that countries that had already committed to building nuclear plants - such as the UK, China and the United Arab Emirates - will now change their tack. "People have had one and a half years to absorb the shock of Fukushima, and most countries have taken a quite mature view," says Tim Yeo, chairman of the Commons Select Committee on energy. While most nuclear new-build programmes will probably still go ahead, the Japanese decision could have important implications for engineering companies with a Japanese connection that build nuclear reactors, such as GE Hitachi and Westinghouse Electric Co, which is 67 per cent owned by Toshiba . "Historically, these companies have traded from a very strong domestic base with government support, and if that base disappears it will be interesting to see how they fare," says Daniel Grosvenor, head of UK nuclear at Deloitte. Westinghouse challenged that view. "Our business is very robust and global and we're not dependent on any one market," it says, noting that all of the new AP1000 reactors it is currently building are outside Japan - four in China and four in the US. But the Japanese move clearly creates an opening for others. "It's an opportunity for other countries - such as China and the UK - to take their own lead in nuclear technology," says Mr Yeo.