Fitch Ratings says that the safety issues around the Japanese nuclear plants affected by the 11 March earthquake and tsunami will result in additional scrutiny of new nuclear plant proposals in the EMEA region. Furthermore, negative public perceptions of the industry will also likely influence public policy across EMEA on existing nuclear operations and the permitting of new plants that are currently under review for approval. As a result, Fitch believes these developments may adversely affect the future credit profiles of nuclear plant sponsors and technology providers.

Germany was among the first EMEA countries to announce potentially far-reaching policy changes shortly after the Japanese nuclear disaster. Fitch believes that the short-term financial impact of the government's three-month moratorium on German nuclear extensions might largely be mitigated by the utilities, E.ON AG ('A'/Stable), RWE AG ('A+'/Stable) and EnBW Energie Baden Wuertemberg AG ('A'/Stable), through generation mix optimisation. However, this measure is in addition to the negative impact of the closure of seven out of 17 nuclear power plants. There is also a risk that German nuclear operators will be exposed to the recently established nuclear tax, without the benefit of lifetime extensions. Fitch believes the potential full reversal of the nuclear extension would be credit negative for the German utilities, which are in the middle of implementing adjustments to their mid-term strategies related to the introduction of the nuclear tax.

Fitch believes France is likely to continue to support its current nuclear policy and EDF ('A+'/Stable) may not see any changes in its domestic operations. However, the international operations of EDF, GDF Suez, and Areva may still be negatively affected in the aftermath of events in Japan.

To date, the UK and Switzerland have suspended the permitting of new nuclear power plants until completing a further review of safety measures. Finland and Bulgaria also plan to review safety measures. This will affect construction of 18 new power plants. Russia, the Netherlands, Poland, Sweden, and the Czech Republic have supported their nuclear energy policies by confirming that they will go ahead with proposed new builds. However, these projects may still see the impact of new industry-wide safety compliance requirements, in addition to potential construction delays.

Fitch now expects considerable delays in the construction of new units due to changes in regulatory requirements and safety mandates that will hold up certification and permit processes. The additional costs to comply with the new regulations will not be the only itemised increase in the construction budget, but inability to hedge increases in project costs due to changes in the design may also raise the construction risk and will require stronger Engineering Procurement and Construction contractor and sponsor guarantees as mitigating factors. Furthermore, any company planning to build a new nuclear plant will have to revise its plans as the rules are likely to change and hurdle rates will be harder to achieve following a reassessment of credit risks and potential shortfalls in project guarantees.

Currently, an additional 500 nuclear units are being proposed globally, of which over 130 are in Europe, with the bulk of the remainder - around 350 units - in Asia. Globally, around 60 units are under construction in addition to over 400 nuclear plants in operation, generating approximately 15% of the world's total electricity output.