GLOBAL - One year on from the nuclear disaster in Fukushima, Japan, its after-effects are still felt in the energy sector - and could influence investor decisions in the industry.

Ian Simm, chief executive at Impax Asset Management, said: "At a national level, a lot has changed in the sense that the Japanese have failed to bring back online almost all of their nuclear power stations.

"Only two out of their 54 nuclear plants are still in operation, and there are serious doubts about whether any of those offline will be brought back because there is a lot of resistance at a local level.

"Because it has lost most of its nuclear capacity, Japan has had to make dramatic cutbacks in consumption, improve efficiency and switch on previously mothballed fossil fuel power generation stations. They are also in the process of developing an entirely new energy policy."

The knock-on effects were also felt in other countries - Germany announced it would completely abandon nuclear power by 2022, while Switzerland and Belgium have also agreed plans to phase out their nuclear plants. In China, the development of nuclear stations has slowed down significantly.

Simm said: "The key issues for Japan and other countries that are phasing out nuclear power are what will replace the base load generation and what can be done to reduce peak demand.

"In the short term, the base load power generation is going to be provided by more widespread use of coal, but, in the longer term, there will need to be a big push towards energy efficiency."

Simm said gas would become a more important fuel and that more renewable energy would be coming on-stream.

"With the International Energy Agency expecting $750bn (€572bn) a year to be invested in the power sector worldwide over the next 25 years, there is a major opportunity for investors to participate in these new investment programmes - from power generation to transmission and distribution," he said. "Meanwhile, tougher regulations on pollution plus higher carbon price are likely to reduce profits for coal-fired power stations."

Also on the first anniversary of the Fukushima disaster, Ernst Glanzmann, fund manager of the JB Japan Stock Fund at Swiss & Global Asset Management, pointed out that Japanese companies recovered quickly from the events in March 2011.

"The Fukushima disaster led to an overall economic loss of more than $200bn, making it the costliest natural catastrophe on record," he said.

"Nevertheless, in a very short time, most companies were able to recover production and corporate profits have largely returned to pre-earthquake levels. Some internationally geared companies are reporting their best earnings ever."

Topics