Merkel's center-right Christian Democratic Union and the pro-business Free Democratic Party were in coalition negotiations Monday; a government will be formed within the next four weeks, the chancellor said.

With the CDU and the FDP both supportive of nuclear energy, their coalition agreement is slated to address the country's nuclear phase-out plan, which foresees all German reactors to be shut down by 2021.

Claudia Kemfert, an energy expert with the Berlin-based DIW research institute, said the phase-out, drafted and defended by the SPD and the Greens, should no longer hold.

"The running times of Germany's most modern nuclear power plants will likely be extended," she told UPI in a telephone interview. A construction of new reactors is not likely to happen, she added.

Germany's three main energy companies, Eon, RWE and ENBW, all gained in Monday trading in Frankfurt.

The CDU and the FDP argue that nuclear provides secure, relatively cheap CO2-free power and should remain in the mix until renewables are ready to take over; the SPD and the Greens point to the dangers of accidents, nuclear proliferation and the unsolved issue of how to store the highly radioactive waste created in the process.

Kemfert said a decision to extend the running times of nuclear power plants should include a guarantee to haul back the utilities' additional revenues in the form of a tax. That money could be spent on nuclear waste storage or renewable energy technologies, observers say.

Mirko Bothien, a German power plant turbine expert working for a large international energy company in Switzerland, is not too excited by the new government's plans for the future German energy mix.

"The CDU and the FDP bank on cheap energy production to help the German industry. Let's hope this does not go at the expense of climate protection," Bothien told UPI in an interview.

The physicist gave his vote to the Greens, "because their party program is the most ambitious when it comes to supporting renewable energy sources."

Thanks to a lucrative feed-in tariff for green power, the German renewable industry has boomed over the past 10 years.

Kemfert said the new coalition would likely not touch the successful German renewable energy law, the EEG.

"But there might be a discussion regarding cutting the feed-in tariff for solar energy," which is threatening to cost the government billions of dollars over the next few years.

Kemfert said the CDU and the FDP should install an energy ministry that drafts unified energy policies -- currently, several ministries are involved in drafting energy-related policies, which has resulted in a zig-zag course here in Germany.

The new government also needs to address what's going to happen with the German coal industry.

"There must be a funding decision on carbon capture and sequestration," Kemfert said of the 'clean coal' technology that will need significant public money to become market-ready.

Germany's significant energy ties with Russia, the main importer of German oil and gas, will continue virtually unchanged, observers say.

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