The Nuclear Option

Brian Hicks

Updated March 11, 2011

The demand for electricity will increase by 50% in just two and a half decades.

The Energy Information Administration forecasts world electricity demand to balloon from 495 quadrillion Btu (quad) to 739 quad.

Take a look:

mar 2011 world electricity demand

To meet this rising demand, the global power sector will need to add nearly 5,000 gigawatts (GWe) of new electrical capacity to the global grid.

To put that into perspective, a city the size of San Francisco requires about 1 GWe of electricity to run function.

To boost the world’s electrical capacity, industry analysts estimate that a whopping $10 trillion is needed to build new power generating facilities and to replace aging infrastructure.

But coming up with the money isn’t the real problem…

Fossil Fuels: The sobering realities

mar 2011 oil pumpNearly 75% of the world’s electricity is currently generated using fossil fuels — mostly coal and natural gas.

These natural resources are ultimately finite, and there’s no doubt that sooner or later we’ll need to switch to an alternative.

In response to this, worldwide governments and corporations have already spent hundreds of billions searching for viable alternative energy sources.

Among the alternative energy sources being researched are the so called “green” alternatives, such as solar, wind, hydroelectric, and geothermal.

The technologies behind these alternative energy generating sources have seen significant advances over the past several years. But at present, they simply cannot meet the growing global energy demand in a cost-efficient manner…

Nuclear power is, however, the one alternative available that is able to meet growing electricity demand throughout the world.

“It is not too much to expect that our children will enjoy in their homes electrical energy too cheap to meter.”
– Lewis Strauss, Chairman of the U.S. Atomic Energy Commission (1953-1958)

Consider this: A single kilogram of uranium can yield approximately 20,000 times the energy as the same amount of coal can.

This makes nuclear energy remarkably more efficient than current electricity generation.

A typical 1,000 megawatt electrical coal-fired power plant has a fuel requirement of about 3,200,000 tonnes of black coal a year. A nuclear power reactor of the same capacity has an annual requirement of only 27 tonnes of fuel.

Producing this amount of uranium fuel requires the mining of between 45,000 and 70,000 tonnes depending on the grade of ore.

This yields about 200 tonnes of yellowcake (U3O8), which is sold and enriched to yield the 27 tonnes of actual fuel.

The U.S. Department of Energy reports nuclear power costs 1.72 cents per kilowatt-hour (including operations and maintenance costs).

Compare that to:

  • Coal at 2.37 cents per kilowatt-hour;

  • Natural gas at 6.75 cents per kilowatt-hour; and

  • Oil at 9.63 cents per kilowatt-hour

With diminishing supplies of finite fossil fuels, nuclear energy is almost guaranteed to make a comeback. And with a troublesome supply/demand imbalance, we are at the beginning stages of a massive bidding war in uranium…

Uranium prices have already begun to rapidly move higher. In the past few weeks, uranium increased from $40 to over $70 per pound, prompting interest in the sector from commercial and retail investors.

The overall uranium market still seems bullish with many new large buyers emerging over the past several weeks.

And all this makes for a great opportunity to invest in uranium stocks.

I have recently begun to reorganize my portfolios to leverage $100 uranium this summer. And over the next few weeks, I’ll be writing to you about various uranium investment opportunities.

I’ve been busy making phone calls and looking into several uranium companies for Wealth Daily readers. I expect to have a new uranium investment opportunity for you soon.

Companies in the uranium sector should very well this year and deliver spectacular gains for their shareholders.

We’ll be there to reap the benefits.

Good Investing,

Greg McCoach
Analyst, Wealth Daily
Investment Director, Mining Speculator and Insider Alert

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