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Nuclear Power is Not Dead... Not by a Long Shot

Riding New Designs to Big Profits

Written by Brian Hicks
Posted April 13, 2011

Obviously, the last thing the nuclear power industry needed was another black eye.

Yet even with ongoing disaster in Japan, the nuclear power revival is one that cannot be stopped — even by the combined power of an earthquake and a tsunami.

Outside of the dramatic news coverage, the atomic beat goes on. Here's why...

As desirable as it is to develop a safer alternative, nuclear power is still one of the bedrocks of the power generation that fuels the world economy.

All told, 442 nuclear power plants across the globe provide roughly 14% of its electricity generation.

That figure is going to be impossible to finesse or eliminate... even under the best-case scenarios for the development of wind, solar power, and/or other forms of alternative energy.

According to the International Energy Association (IEA), world electricity demand is likely to grow 2.7 percent a year from now until 2015, and then at 2.4 percent annually until 2030 — making nuclear power even more of a necessary evil.

Nuclear Revival Lives

The result: The nuclear industry is experiencing a major global power surge.

Worldwide, 65 reactors are already under construction with 344 more reactors planned. Add it all up and it makes for a 92% increase from today's levels for the global nuclear industry.

Even through the lens of the Fukishima disaster, this trend will go on long after the current Japanese turmoil leaves the headlines...

Why?

Because realistically, there is no other course.

What will change as a result of these recent natural disasters is plant design; while engineers haven't been able to prevent every single accident, they have learned from them — making new nuclear power plants safer than they have ever been.

One of the design developments for investors to keep an eye on is in construction of what are known as small modular reactors (SMRs).

This new school category of plants is defined as reactors making less than 300 megawatts of electricity, or the amount needed to power 300,000 American homes. (That's about a quarter of the energy output of today's big reactors.)

Factory-built and delivered on site, small modular reactors have the potential to change the nuclear landscape.

In this case, it's as simple as time and money. Because unlike large reactors that cost as much as $10 billion and take five years to build, small modular reactors can be built in half the time and for as little as $5000 per kilowatt capacity.

What's more, the modular units arrive on site ready to "plug and play", dramatically changing the old model of time and cost.

But here's the real kicker: SMRs are designed for a high level of passive or inherent safety in the event of a malfunction.

In fact, according to a 2010 report by the American Nuclear Society, many of the prudent safety provisions already built in large reactors are unnecessary in the smaller designs. And their smaller size also allows them to be built underground, making them considerably less vulnerable to the events that caused the Fukishima disaster.

“This is a reactor that is designed with safety first,” says Victor Reis, senior advisor in the Office of Undersecretary of Energy for Science, “not one that you do the physics first and then add the safety on.”

These smaller designs also have the support of the current administration, whose 2012 budget request provides $67 million to help companies develop smaller plants and win regulatory approval for their designs.

Meanwhile, the Commerce Department recently called SMRs a “tremendous new commercial opportunity for U.S. firms and workers” since, according to the International Atomic Energy Agency, the global demand for small modular reactors could reach 500 to 1,000 reactors by 2040.

One of the early leaders in this new trend is a long-time nuclear player called Babcock and Wilcox (NYSE: BWC).

~~SIGNUP_WD~~

A nuclear power play

It's a company I recommended to Wealth Advisory subscribers a year ago when it was still owned by its parent company, McDermott International (NYSE: MDR). Since then, it's up a hefty 34%.

Drawing on its 50 years of experience in manufacturing nuclear propulsion systems for the U.S. Navy, Babcock and Wilcox has formed a joint venture with Bechtel Corp. to develop and build SMRs.

Called Generation mPower, this partnership pairs Babcock and Wilcox with the company that has built more than half of the 104 nuclear power plants operating in the United States.

A more practical way to generate nuclear power, these mPower reactors would be capable of generating 135 to 140 megawatts of power while costing much less than a traditional reactor. (Compare this new technology to the first commercial reactor built in the U.S. in 1957, which was only about 60 megawatts in size.)

And unlike the giant-sized and vulnerable reactors that failed in Japan, the mPower reactor is no larger than a railroad boxcar. You can learn more about these new units by clicking here.

Needless to say, though nuclear power plant investors aren't going to be the only ones to profit from this global nuclear power surge...

The fuel that powers these plants also promises to rise.

Nowhere to Go but UP

In fact, analyst Luke Burgess believes the biggest energy gains for the year may be found in uranium as raging Chinese demand for the energy metal sends prices screaming higher.

According to Luke, this commodity stands to go as high as $100 as a result of a massive supply and demand imbalance, earning early investors dramatic gains.

Today, uranium trades for as little as $59.00. And there's no uranium project larger than the one owned by a tiny junior uranium mining outfit that's still trading under the radar.

This new company just put together a massive land package that covers over 1 million acres in an area that many believe could hold one of the world's last giant uranium resources...

Tomorrow, Luke will be sending you a brand-new report detailing this small company and their amazing project.

But no matter how you choose to invest in this trend, keep in mind that nuclear power has nowhere to go but up long term.

The latest rumors of its demise are greatly exaggerated.

Your bargain-hunting analyst,


steve sig

Steve Christ
Editor, Wealth Daily

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