Japan's radioactive nightmare is roiling the global nuclear marketplace, hurting prospects for key industry players that are facing a growing backlash over safety.
Amid the clouded outlook, investors have dumped shares of industry giants ranging from reactor builders such as General Electric Co. and Toshiba Corp., to U.S. utilities such as Entergy Corp. and Exelon Corp. and engineering firms such as Montreal's SNC-Lavalin Group.
After decades in the doldrums, the nuclear energy industry had enjoyed a broad resurgence in recent years as energy-hungry but resource-poor Asian nations sought to power rapid economic growth. European and North American countries, meanwhile, set plans for new reactors as part of an effort to replace aging power plants while reducing greenhouse gas emissions.
The Japanese crisis imperils that renaissance, and the companies positioned to profit from it.
Chinese and German governments have either delayed new building plans or closed old plants. Governments in the United States and Canada have given their support to the industry, but will likely insist on ever more safety requirements, driving up costs. The already huge cost of building new plants are being driven higher by modern safety requirements such as redundant emergency cooling system and thicker containment walls. And companies will likely face growing backlash from citizens who fear accidents in their backyards.
In the U.S., utilities that operate in deregulated electricity markets are particularly vulnerable to the potential for increased safety standards, said Michael Worms, an analyst with Bank of Montreal's investment arm in New York. They include companies like Constellation Energy Group, Entergy and Exelon.
And companies that have long dominated the international reactor business could face a painful drought. They include the joint venture between GE and Hitachi Ltd., Toshiba Corp.'s Westinghouse unit, and French-based Areva group.
Still, Japan's disaster is unlikely to completely smother nuclear energy's comeback, since alternatives are problematic. Emerging markets with growing populations are desperate for modern power systems that reduce their reliance on power produced from coal-fired plants and other methods that create greenhouse gases.
Even as emergency crews battled desperately to get control at the Fukushima Daiichi plant, South Korea President Lee Myung-bak attended a groundbreaking for a new South Korean-built nuclear plant in Abu Dhabi.
Two days later, Russian Prime Minister Vladimir Putin signed a $9.4-billion (U.S.) deal to have Russian companies build reactors in Belarus, 25 years after the former Soviet republic was contaminated with radiation from the Chernobyl plant in the Ukraine. He declared nuclear energy to be essential to the energy needs of many countries.
Even China will almost certainly resume its building program, once it has reviewed questionable safety practices.
"There are strong imperatives for China to diversify its generation mix," said Thomas Grieder, an analyst with IHS Global Insight. "It's still experiencing problems in carrying on with coal production and burning coals with the same way it has been doing, and to do so would completely undermine its targets to reduce carbon intensity."
China's program is dominated by domestic state-owned companies. But Western engineering and construction firms are winning contracts and hoping to expand their market share. Even Canada's Atomic Energy of Canada Ltd. holds out hope of winning business to refurbish older reactors or other reactor services.
The Japanese-American ventures would be the primary beneficiaries of the U.S. plans to build dozens of new reactors over the next decade.
They have a far-reaching supplier group that works with the federally owned AECL in its Candu reactor program. AECL's refurbishment and new-build business supports such diverse players as major manufacturers GE-Hitachi and Babcock-Wilcox; engineering firms like SNC and Golder Associates; and instrumentation and fabrication firms from across Ontario and Quebec.