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Seven stocks to benefit from a nuclear shortage Add to ...

The nuclear meltdown in Japan is prompting the world to reassess its reliance on nuclear energy.

"One thing is certain: Events in Japan will have a profound effect on the nuclear power industry in the U.S. and throughout the world for some time to come," said Standard & Poor's in a March 16 research note.

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Nuclear energy provided 13.5 per cent of the world's electricity in 2008, and it has grown rapidly since then, according to the International Energy Agency. So it would take a huge shift in the world's energy-producing industry if governments decide nuclear power isn't worth the risk.

North America's electricity is generated primarily from three resources: coal, at 45 per cent, nuclear energy, 24 per cent, and natural gas, 19 per cent.

Natural gas and coal producers are expected to see a spike in demand to fill the gap for lost nuclear-generated electricity capacity, while alternative energy sources, such as solar and wind, are likely to gain new supporters.

Share prices throughout the energy industry have gone haywire over the past week with the huge, diversified utilities sector, which includes electricity producers that have coal and nuclear-energy generation plants, losing 2 per cent, while the small $15.5-billion (U.S.) solar energy industry gained 8.6 per cent.

The S&P 500 Index lost 1.6 per cent over the week ending March 17 and is up only 1.7 per cent this year. The benchmark index has dropped about 5 per cent in the past month.

For now, the long-anticipated "nuclear renaissance" looks like it's on hold. Gary Anderson, co-manager of the $7.6-billion Scout International Fund, said in an interview Friday he expects new construction or expansion of nuclear plants will be postponed for at least six months to a year, as governments and the industry reexamine safety concerns and refines plans for new plants.

The result will require significant new investments and much higher operating costs.

But Anderson is confident nuclear energy will make a comeback. "Modern civilization needs clean, reliable energy, and nuclear energy provides that and is the energy of the future."

Travis Miller, head analyst of the utilities sector at Morningstar, agrees. He said Thursday that "nuclear power will still be a significant energy source in the U.S. for the foreseeable future."

In the interim, there's a worldwide scramble for sources of energy to fill the gap caused by the loss, or reduction, in nuclear-power capacity.

Here's a review of four nuclear-industry companies that face immediate challenges, but could rebound when governments come to terms with nuclear power, as well as three that are leading producers of energy resources seeing renewed investor interest.

One example of how difficult it is to divine the energy sector's direction is the situation at NRG Energy , which generates energy from coal and nuclear resources in the U.S. and four other countries. It sells it wholesale to other utilities and to a huge network of retail customers in Texas, California and the Northeast.

The Princeton, N.J.-based company is in the planning stages of expanding its nuclear facility in Bay City, Texas, essentially doubling its output, which would make it the nation's largest nuclear power plant. Coincidentally, its partner in that deal, with an 18 per cent stake, is Tokyo Electric, the operator of the crippled Fukushima Daiichi nuclear power station in Japan.

NRG has a loan guarantee from the U.S. Department of Energy to help fund that expansion. The White House said recently it's going to continue to support new nuclear energy programs while reviewing safety precautions and plants' ability to withstand natural disasters.

NRG also has top-notch coal resources including coal-fired power plants and a cheap source due to its holdings in the Powder River Basin in Wyoming.

Analysts tracked by TheStreet recently gave the company four "strong buy" ratings, one "moderate buy" and eight "hold," but those ratings could change soon as analysts reevaluate the energy sector as events unfold around the world.

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