How Japan’s Crisis Could Affect Cleantech

Japan’s massive earthquake, tsunami, and now nuclear disaster, is starting to shine a spotlight on just how important the country is in terms of clean energy technology, from solar to electric cars.

In these early days, two initial assessments have emerged. The supply of materials and parts for solar and EVs could face serious interruptions in the short term. At the same time, the focus on Japan’s partially melting nuclear reactors could also bolster solar and other renewable energy development as policymakers and investors reconsider their support of nuclear power.

Japan is both a large producer and user of solar energy equipment. The country accounted for more than a fifth of the world’s chip production in 2010, according to IHS iSuppli, and many of the same Japanese firms that make chips and electronic gadgets also make solar energy equipment. While factories for making the final products may not suffer serious long-term damage, they might find it difficult to get raw materials and parts in the near term, the market research firm said.

“Suppliers are likely to encounter difficulties in getting raw materials supplied and distributed and shipping products out. This is likely to cause some disruption in semiconductor supplies from Japan during the next two weeks,” IHS iSuppli said.

Major solar manufactures in Japan include Sharp, Kyocera , Sanyo and Solar Frontier (with the largest copper-indium-gallium-selenide factory in the world). Christopher Loncto, director of media relations for Sharp Electronics, told us the quake and tsunami hadn’t caused major damage to any of its factories — not just solar– but the precise extent of the impact remains to be seen. Issues such as power outages — which are anticipated  — would interrupt factory operations, of course, even if the equipment is in good shape to continue operating. Solar Frontier said the quake and tsunami didn’t affect its operations, and its supply chain “appears to be intact at this time, but we are reviewing all incoming and outgoing logistics as ports around Japan are recovering from the events of Friday.”

Taiwan-based AUO Optronics has suspended its operation at M.Setek in Japan, where it makes polysilicon and turns it into wafers to make solar cells. A company executive told local media over the weekend that the factory didn’t sustain damage but couldn’t get running because of lack of electricity and water.

Japan is also among the top five solar energy markets, thanks to government’s commitment to reduce greenhouse gas emissions and solar subsidies. Piper Jaffray’s analyst, Ahmar Zaman, said in a research note Monday that it expects Japanese solar gear makers to try to market products even more aggressively outside of the country, as solar spending in Japan, where residential solar installations are big business, will suffer for a while. But whether that means a big drop in solar panel pricing in the global market remains unclear, though, given that Zaman also expects to see polysilicon prices to go up as a result of a lower supply of the material from Japan.

Japan is a key supplier of electric cars and components, as well. Toyota has stopped its plants for making Prius, prompting concerns from dealerships. Panasonic, which makes a bunch of electronics as well as lithium-ion batteries for the Prius, said Monday it hasn’t received reports of any major damage to its factories, but can’t say yet the impact of the quake on its production. Panasonic (s pc) has a battery cell development deal with Tesla Motors (s tsla), which in turn has a development agreement with Toyota to help design an electric Rav4 using Tesla’s powertrain. Nissan, maker of LEAF, also has suspended production at its factories in Japan.

Meanwhile, solar stocks have been on an up-and-down ride thanks to the drama at Japan’s nuclear reactors, which started to have a partial meltdown because the quake knocked the cooling systems offline. While the extent of the situation is still uncertain at the nuclear plants, the cleanup costs will clearly already be staggering, and a nuclear backlash is now underway in the United States, Europe and Asia.

As we pointed out over the weekend, President Obama and Energy Secretary Steven Chu have been amassing one of the most aggressive government plans to support nuclear power in the U.S. in decades. Last year, the DOE announced $8.3 billion in loan guarantees to Southern Company to build two nuclear plants in Burke County, Ga., which will be the first nuclear plants in the U.S. in almost three decades.

All these talks have made solar appear that much more environmentally friendly, and that has seemed to push up the solar stocks of companies such as First Solar (s FSLR), MEMC Electronic Materials, Yingli Green Energy and JA Solar. While these stocks benefited from Japan’s woes, the overall U.S. stock market has suffered because Japan plays a key role in the global economy.

Photo courtesy of Diegosaurius Rex