Growth Potential of The Nuclear Energy Industry
With the United States eyes set on tripling energy capacity and achieving net-zero energy emission by 2050, nuclear power has recently become a hot discussion topic. According to the DoE, “the plan is to add 35 GW of new capacity by 2035 and achieve a sustained pace of 15 GW per year by 2040 to help keep us on track toward our ultimate goal.” The U.S. currently has 94 operable reactors, producing a total of approximately 97 GW. The U.S. is not the only other country to make this lofty pledge either. In fact, 31 other countries including the UK, France, and Japan have agreed to triple their output by 2050 with the U.S. and UK formally announcing their plans to coordinate the development of nuclear technology to expedite this industry's growth. With the goal of increasing energy output being so broad, one must wonder why other renewable energy sources are not benefiting proportionately from these energy initiatives. The answer has to do with the inherent reliability of nuclear energy in comparison to other energy sources.
To reduce our carbon emissions, we must limit our reliance on coal-fired power plants. As a result, some may suggest a shift towards an energy economy balanced using traditional renewable energy sources. However, these energy sources are not reliable enough to turn to. The main renewable energy sources such as wind, solar and hydro all rely on factors outside of human control. Fred Bosselman put it best when he said “if the wind isn’t blowing or the sun isn’t shining or it hasn’t rained much, other reliable sources must be there to replace the unreliable sources. This means that any estimate of the true cost of wind, solar, and hydro should factor in a share of the capital cost of the needed backup facilities” (21). This is not to say that renewables should not be used at all, they merely have a limited role. Due to their reduced role, a more reliable energy source is needed. Nuclear energy is inherently reliable. Since the energy source is the result of a controlled spontaneous reaction, all that is required is a source of uranium or another radioactive isotope. Nuclear power plants do not rely on any other external factors that are outside of human control, and they are not subject to certain geographical locations making them ideal to produce our nation’s base-load energy requirements. (Bosselman, Fred. "The Ecological Advantages of Nuclear Power." NYU Envtl. LJ, 15 (2007): 1-52.)
To add to the fire, President-Elect Donald J. Trump has recently nominated Chris Wright, founder of Liberty Energy Inc, for U.S. Secretary of Energy. Liberty Energy Inc is a company that engages in the exploration and services for oilfields in North America. Initially, this may seem like a step back for nuclear energy, however, Chris Wright also serves on the board of directors for Oklo, an advanced nuclear technology company. Having an individual with ties to the nuclear industry at such a pivotal position may prove prudent for further nuclear energy development.
Overall, the stage has been set for a nuclear revolution similar to the one that was seen from 1970 to 1990. Understanding how you position yourself in the market to benefit from this growth will be crucial. As the U.S. begins to move from Russian enriched uranium to relying on more domestic uranium production, companies like Centrus Energy (NYSE: LEU) and BWXT (NYSE: BWXT) look to benefit. Recently, Centrus announced a $60 million project to expand on their current enriching facility in Oak Ridge, Tennessee.
The advanced nuclear technology sector has seemed to catch the eye of large technology companies such as Amazon, Microsoft and Google who have taken a particular interest in the applicability of SMRs for their growing energy needs. Some prominent public SMR companies include Oklo (NYSE: OKLO) which should sound familiar as that is the same company that Chris Wright serves on the board of directors for, as well as NuScale (NYSE: SMR) which is the only SMR company to have an NRC approved design certification. Due to the potential governmental leverage that Oklo has and the headstart that NuScale has in the licensing process, both companies are poised to participate in any potential nuclear growth.
Although it may appear to be a no-brainer to invest in nuclear energy due to the current macroeconomic environment and future presidential administration, nuclear energy still suffers from numerous issues when it comes to putting theory into practice. Nuclear power plants are notorious for finishing construction behind schedule and over budget. Take Vogtle Units 3 and 4 for example. Both units finished 7 years late and about $21 billion over the initial $14 billion estimate. While this is probably due to the unique nature and complexity of nuclear construction, some see this as an argument for SMRs, arguing that their smaller profile should make it easier to construct, helping the project stay on budget. In reality, the issue likely lies within the construction companies themselves. The construction of nuclear reactors is so infrequent that construction companies simply don’t have the requisite experience to understand common sticking points throughout the construction process. This should be a self-correcting issue as the demand for other nuclear projects grows.
Another issue that has plagued the industry since inception is the question of radiological waste disposal. This issue is deserving of an entire article on its own, but overall, the consensus seems to be a geological repository for high-level radioactive waste, the location of which continues to be debated.
Despite the momentum that seems to be building within the nuclear sector, the industry continues to be plagued by the issue of building cost and time, and radioactive waste disposal. Without a proper solution for either of these issues, the work that has been done to prepare for nuclear energy expansion will have been a waste.
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