A series of accidents in Japanese nuclear power plants that followed a devastating earthquake and subsequent tsunami Friday looks set to prompt a fundamental rethink of atomic power generation in Germany, putting pressure on shares of reactor operators E.ON AG (EOAN.XE) and RWE AG (RWE.XE).

German Chancellor Angela Merkel will announce the temporary suspension of her government's plan to extend the operating lives of the country's 17 nuclear power plants, magazine Focus reports on its website Monday.

Foreign Minister and Vice-Chancellor Guido Westerwelle earlier Monday said a temporary suspension of the extension plan would be "conceivable."

Both Merkel and Westerwelle over the weekend said that the government would initiate a review of the safety standards of Germany's nuclear reactors. Additional modernization requirements could cost the power plant operators billions of euros, adding to the previously agreed tax on nuclear fuel, contributions to a renewable energy fund and investment to improve safety standards.

The market offered a severe response to the comments with shares in E.ON and RWE--Germany's largest operators of nuclear power plants trading sharply lower.

At 1400 GMT, RWE was down 4.4% at EUR45.82, while E.ON shares traded lower 5.4% at EUR21.85.

Meanwhile, forward power prices on Germany-based European Energy Exchange rose due to concern that a suspension of the nuclear lifetime extension could draw electricity production out of the market.

Peakload prices for delivery in 2012 rose around 3.6% to EUR66.30 per megawatt-hour, from EUR64.84/MWh on Friday.

In 2009, nuclear reactors accounted for around 23% of Germany's power production, making them the second largest contributor to overall output behind lignite-fired power plants.

The government last year decided to allow nuclear power stations to operate by on average 12 years longer than previously planned. The measure overturned a decision from a decade earlier to switch off Germany's last nuclear reactor by around 2022.

Although it allowed Merkel to make good on a campaign promise and was largely a boon to Germany's powerful industrial companies and utilities, it wasn't popular with a public that includes some of the world's most vociferous opponents of nuclear power.

The power plant operators have repeatedly said their reactors are among the safest across the world, but they still agreed to modernize their power plants in return for longer operating lives.

To date only one power plant--the Neckarwestheim 1 reactor owned by EnBW Energie Baden-Wuerttemberg AG (EBK.XE)--is operating under the extension agreed last year.

RWE's Biblis A and B reactors are likely the next to enter the extension stage, possibly as early as 2011.

Abandoning the extension of nuclear reactors' operating lives--even if temporary--would cast serious doubt over the government's climate protection target.

The extension plan is part of a broader energy roadmap through 2050 which also includes targets for drawing more power from renewable energy, modernizing power grids, and improving efficiency.

Four decades from now, the government wants greenhouse gas emissions to be 80% lower and for some 60% of the country's power to come from renewable sources--up from about 16% today.

To help achieve that goal the lifespan of the country's 17 nuclear reactors was extended, allowing them to serve as a low carbon dioxide emitting "bridge technology," the government has repeatedly said.

Environment Minister Norbert Roettgen over the weekend said the government would now look to accelerating the expansion of alternative energies, given that the accidents in Japan raise doubts about the use of nuclear energy.

Meanwhile, solar energy and wind power equipment makers gained sharply as investors anticipated the incidents in Japan could result in faster expansion of alternative and greener energy sources.

Shares in solar cell makers Q-Cells SE (QCE.XE) and SolarWorld AG (SWV.XE) as well as wind turbine maker Nordex SE (NDX1.XE) traded sharply higher, posting gains of 14.1%, 11.1% and 16.3% respectively.

-By Jan Hromadko, Dow Jones Newswires; +49 69 29 725 503; jan.hromadko@dowjones.com

(Patrick McGroarty in Berlin contributed to this article.)