One year ago, Japan's earthquake and tsunami disasters sent ripples throughout the world. The resulting nuclear failure at its Fukushima power plant caused a variety of nations to rethink how they power their populations. Both Germany and Switzerland pledge to end the use of nuclear power in their nations by 2020 and 2034, respectively. To that end, both have taken up the mantle of renewable and alternative energy sources as way to meet their electricity demands. Germany recently unveiled its plans on how to implement that shift and the dollar amounts are staggering. For investors, this could be exactly the catalysts needed to spark renewables swing into the mainstream.
Investopedia Markets: Explore the best one-stop source for financial news, quotes and insights.

Billions of Dollars
Since March of 2011, the German government has been reviewing the role of nuclear power in the country's electricity mix. As the Fukushima Daiichi nuclear complex continues to malfunction, Germany ultimately made the ambitious decision regarding the fate of its nuclear power plants: the nation will close down all of its nuclear power plants by 2022.

In order to replace the seventeen nuclear reactors that supplied about a fifth of its electricity with renewables, German will have to undertake a massive public works project. Just how big? Chancellor Merkel has plans to construct an offshore wind farm, roughly the size of Manhattan and erect a grid whose lines could stretch from London to Baghdad. In order to get the 25,000 MW or about 25 nuclear power plants worth of generating capacity, Germany will require about 5,000 turbines and 2,800 miles of new high voltage power lines in order to connect the turbines with the electric grid. In addition, upgrades to storage and frequency regulation must be made in order to get the "choppy" renewable power into the grid correctly. Overall, the program will cost around $263 billion to build.

So far, Germany has already built the world's biggest renewable generation complex. The nation had a capacity of 53.8 gigawatts worth of wind and solar generators at the end of 2011. While the project is certainly ambitious, Germany has had a history of innovation in renewables and was the first major economy to provide incentives for clean energy. The nation pioneered the idea of offering feed-in tariffs that guarantee above-market prices for solar power back in 2004. If there's any nation that seriously implements a major shift towards renewable energy, its Germany's high tech and high engineered economy. (For related reading, see The Basics Of Tariffs And Trade Barriers.)

Playing the Major Shifts
Germany's decision to revamp how it powers itself could finally be the real spark to spur renewables as a viable energy generator. Nations like Sweden, Austria and Slovenia have been following what Germany's example and have begun the planning stages of their own renewable shift. For investors, that could mean a big boost to stocks within the sector. The PowerShares Global Clean Energy (ARCA:PBD) tracks 95 different global renewable and alternative energy based holdings including Suntech Power (NYSE:STP) and smart meter maker Elster (NYSE:ELT). The fund's expense ratio is 0.75% and good be a great broad way to play the shift. Likewise, the iShares S&P Global Clean Energy Index (Nasdaq:ICLN) makes a good choice as well.

Known for its high tech industrial giants, Germany's homegrown companies will see much of the business from its renewable roll-out. German utility E.ON (OTCBB:EONGY.PK) is planning on spending 7 billion euros on new renewable projects over the new five years. Getting a major chunk of that is Siemens (NYSE:SI). The company will provide 80 of its wind turbines to E.ON's Amrumbank West wind farm. The nation's largest construction firm, Hochtief AG has recently purchased four ships in order to build wind farms at sea. These two firms along with the Market Vectors Germany Small-Cap ETF (ARCA:GERJ) and its 30% stake in industrial firms, make ideal choices to play Germany's shift towards renewables.

The Bottom Line
Japan's Fukushima nuclear disaster set in motion a sweeping change in how nations power themselves. Germany's stance to ban nuclear energy and replace that capacity with renewables is certainly ambitious. However, it could be the spark needed to ignite alternative energy stocks. The previous picks, along with the wind-based First Trust Global Wind Energy ETF (ARCA:FAN), make ideal selections to play that monumental shift. (For more, see Earning Forecasts: A Primer.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

At the time of writing, Aaron Levitt did not own shares in any of the companies mentioned in this article.

Related Articles
  1. Economics

    India: Why it Might Pay to Be Bullish Right Now

    Many investors are bullish on India for all the right reasons. Does it present an investing opportunity?
  2. Stock Analysis

    Analyzing Altria's Return on Equity (ROE) (MO)

    Learn about Altria Group's return on equity (ROE) and analyze net profit margin, asset turnover and financial leverage to determine what is causing its high ROE.
  3. Investing Basics

    Building My Portfolio with BlackRock ETFs and Mutual Funds (ITOT, IXUS)

    Find out how to construct the ideal investment portfolio utilizing BlackRock's tools, resources and its popular low-cost exchange-traded funds (ETFs).
  4. Investing News

    Icahn's Bet on Cheniere Energy: Should You Follow?

    Investing legend Carl Icahn continues to lose money on Cheniere Energy, but he's increasing his stake. Should you follow his lead?
  5. Stock Analysis

    Analyzing Google's Return on Equity (ROE) (GOOGL)

    Learn about Alphabet's return on equity. How has its ROE changed over time, how does it compare to its peers and what factors are driving ROE for the company?
  6. Investing News

    Is Buffett's Bet on Oil Right for You? (XOM, PSX)

    Oil stocks are getting trounced, but Warren Buffett still likes one of them. Should you follow the leader?
  7. Investing

    3 Things About International Investing and Currency

    As world monetary policy continues to diverge rocking bottom on interest rates while the Fed raises them, expect currencies to continue their bumpy ride.
  8. Stock Analysis

    The Top 5 Micro Cap Alternative Energy Stocks for 2016 (AMSC, SLTD)

    Follow a cautious approach when purchasing micro-cap stocks in the alternative energy sector. Learn about five alternative energy micro-caps worth considering.
  9. Investing News

    Chipotle Served with Criminal Probe

    Chipotle's beat muted expectations and got a clear bill from the CDC, but it now appears that an investigation into its E.coli breakout has expanded.
  10. Stock Analysis

    Analyzing Sprint Corp's Return on Equity (ROE) (S)

    Learn about Sprint's return on equity. Find out why its ROE is negative and how asset turnover and financial leverage impact ROE relative to Sprint's peers.
RELATED FAQS
  1. Should mutual funds be subject to more regulation?

    Mutual funds, when compared to other types of pooled investments such as hedge funds, have very strict regulations. In fact, ... Read Full Answer >>
  2. Do ETFs pay capital gains?

    Exchange-traded funds (ETFs) can generate capital gains that are transferred to shareholders, typically once a year, triggering ... Read Full Answer >>
  3. How do real estate hedge funds work?

    A hedge fund is a type of investment vehicle and business structure that aggregates capital from multiple investors and invests ... Read Full Answer >>
  4. Are Vanguard ETFs commission-free?

    While some Vanguard exchange-traded funds (ETFs) are available commission-free from third-party brokers, a large portion ... Read Full Answer >>
  5. Do Vanguard ETFs require a minimum investment?

    Vanguard completely waives any U.S. dollar minimum amounts to buy its exchange-traded funds (ETFs), and the minimum ETF investment ... Read Full Answer >>
  6. Can mutual fund expense ratios be negative?

    Mutual fund expense ratios cannot be negative. An expense ratio is the sum total of all fees charged by an asset management ... Read Full Answer >>
COMPANIES IN THIS ARTICLE
Trading Center