I’m a realist.
So naturally, when someone proposes an idea that flies in the face of known facts, I oppose it. And that’s why I’ve discounted nuclear energy as an investment catalyst over the past few years.
I know nuclear energy is viable. I’m aware of its low cost. And, yes, I know what’s being done in France.
But looking good on paper doesn’t translate into tangible realities. . . Just ask AIG.
Despite a proven, scalable technology. . . nuclear hasn’t received traction because of its safety stigma. And it’s hard to build billion-dollar nuclear projects with every Henry Homeowner in opposition.
Not to mention the NIMBY pressure put on politicians at all levels.
Indeed, it wasn’t nuclear energy that I’ve been against; it was its prospect for growth potential in the face of public angst that I doubted.
But I see the needle slowly starting to shift.
A Nuclear Renaissance Renaissance
There’s been talk of a nuclear revival since early this decade. Yet such an event has remained largely elusive in the West.
To be fair, there has been growth in Eastern Europe and Asia. But even with that growth, nuclear’s share of the global energy mix has remained flat — stuck at 16% — since the mid 1980s.
(And this is precisely why renewables have been a better investment. Even though they have less overall market share, they’ve been gaining quickly.)
But now, with energy policy on the plates of policymakers in multiple countries, and with the blessing of the Obama administration, nuclear energy could actually be ready to stage its rebirth.
Leveraging the need for more energy — induced by population growth, development, desalination, and electric vehicles — and its emission-free nature, the nuclear industry has been able to attract an increasing share of a once-wary crowd.
And, as I said, that’s been the real hurdle to nuclear expansion.
Avoiding a Meltdown
A discussion of nuclear revival can’t commence without the mention of Chernobyl or Three Mile Island. . . or the constant reports of improper maintenance and the lack of regulation that often under-reports it.
Nonetheless, the clean safety record over the past 20 years has done much to increase confidence. And, at least in the U.S., so has a promise for increased regulation.
What’s more, this increase in public acceptance — and the political will that is following it — is leading to new research and investment opportunities in the nuclear industry.
In fact, increasing nuclear safety is one of the biggest investment drivers for the industry.
Fueling Nuclear Profits
To overcome the safety hurdle, the nuclear lobby has been funding loads of research at the institutional level. Specifically, they’ve been looking for ways to improve the uranium fuel.
A few select companies are following this research closely. And they’re helping to pioneer new nuclear fuel additives. Think STP for gasoline engines.
These new additives accomplish several things.
First, they improve thermal conductivity. That’s fancy speak for absorbing the heat that is often the cause of nuclear failures. When the additives absorb heat, the core temperature of the uranium pellets is reduced, making for much safer operation.
And that’s not the only benefit.
These new additives also increase an important metric in the industry called megawatt days per ton. This is like miles per gallon for nuclear energy.
By absorbing more heat, these new fuels allow more energy to be created, which greatly increases megawatt days per ton. So not only are these fuels safer, they allow plant operators to buy fuel less often — saving them money in the process.
Testing is still being completed, so I can’t release the name of relevant companies just yet.
But you can bet they’re rushing to get their product to market. In fact, one of the companies is already in talks with one of the largest nuclear fuel suppliers in the world.
China’s planning on increasing its nuclear capacity 500% by 2020. And India wants to add between 20 and 30 new reactors by the same date.
Add to that the 25 new power plants that have been announced for the U.S — some with 2016 commission dates — and you’re literally looking at 3 billion people that will soon be demanding safe nuclear power.
I’ll be sure to pass along the details as they happen.
Call it like you see it,
Nick
