3 actions to play The Nuclear Renaissance

After decades of being treated as the black sheep of the energy universe, nuclear power is enjoying a revival in the US and other countries around the world due to the need for decarbonisation and growing energy demand. Indeed, the world is witnessing an unprecedented increase in the demand for electricity. Last year, energy consulting firm Grid Strategies published a report titled “The era of flat energy demand is over,” which pointed out that grid planners in the United States—utilities and regional transmission operators (RTOs)—almost doubled their growth forecasts in their five-year demand forecasts. For the first time in decades, US electricity demand is projected to grow by up to 15% over the next decade, driven by artificial intelligence (AI), clean energy production and the cryptocurrency boom.

AI, in particular, is expected to drive much of this increase in energy demand. According to the Electric Power Research Institute (EPRI), data centers will absorb up to 9% of all electricity generated in the United States by the end of the decade, up from ~1.5% currently due to the rapid adoption of power-hungry technologies such as generative AI. For some perspective, last year US industrial energy consumed 1.02 million GWh, good for 26% of US electricity consumption.

Not surprisingly, nuclear power is now back in the game. In March, a total of 34 countries, including the US, committed to using it to reduce dependence on fossil fuels. According to the International Energy Agency (IEA) report. Electricity 2024nuclear power generation is forecast to reach an all-time high globally in 2025, surpassing the previous record set in 2021, as new reactors begin commercial operations in many markets, including China, India, South Korea and Europe; production in France increases and several plants in Japan are restarted. In a highly unusual move, the US federal government has agreed to provide a $1.5 billion loan restart a nuclear power plant in southwest Michigan, abandoning earlier plans to decommission it in what would become the first US nuclear plant to be revived after abandonment. Meanwhile, California regulators have given the go-ahead for The Diablo Canyon plant will operate until 2030 instead of 2025 as the state transitions to renewable energy sources. Pacific Gas & Electricfactory owner, said the federal aid helped her repay a state loan.

The IEA now expects global nuclear generation to be almost 10% higher in 2026 than in 2023.

Here are 3 actions to play in the ongoing renaissance of nuclear power.

Constellation Energy

Market cap: $80.3 billion

YTD Returns: 120.5%

based in Baltimore, Maryland Constellation Energy Corporation (NASDAQ:CEG) is an electric power company that sells natural gas, energy-related products and sustainable solutions. The company owns approximately 33,094 megawatts of generating capacity consisting of nuclear, wind, solar, natural gas and hydroelectric assets.

CEG shares soared after Morgan Stanley issued an upbeat outlook for Constellation Energy, predicting that the company’s stock price could rise to $300 per share (up 16.8%) following the recent announcement that Constellation it will restart the Three Mile Island nuclear power plant, five years after its closure. Enterprise software giant, Microsoft Corp. (NASDAQ:MSFT) has agreed to buy electricity from Pennsylvania’s Three Mile Island nuclear power plant to power its data centers.

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The nuclear plant suffered the worst nuclear accident in US history in 1979, but was still producing power until it shut down in 2019. The plant originally had two reactors; one was damaged in that partial meltdown, and the other reactor operated safely until 2019. However, the plant eventually closed because it could not compete with cheaper natural gas and renewables on the grid at that times. Fortunately, growth in energy demand has outpaced growth in renewables, meaning companies like Microsoft looking for carbon-free power are turning to the next best thing: nuclear power.

NuScale Power

Market cap: $3.0 billion

YTD Return: 297.7%

A subsidiary of the American multinational engineering and construction company, Fluor Corp. (NYSE:FLR), NuScale Power Corp.(NYSE:SMR) develops modular light water reactor nuclear power plants to provide power for electricity generation, district heating, desalination, hydrogen production and other process heat applications.

Small Modular Nuclear Reactors (SMRs) are advanced nuclear reactors with power capacities ranging from 50-300 MW(s) per unit, compared to 700+ MW(s) per unit for traditional nuclear reactors. Given their smaller footprint, SMRs can be located in locations that are not suitable for larger nuclear power plants, such as decommissioned coal plants. Prefab SMR units can be manufactured, shipped and then installed on site, making them more affordable to build than large power reactors. In addition, SMRs offer significant savings in construction costs and time, and can also be phased in to match growing energy demand. Another key advantage: SMRs have low fuel requirements and can be refueled every 3 to 7 years, compared to 1 to 2 years for conventional nuclear power plants. Indeed, some SMRs are designed to operate for up to 30 years without refueling.

The US Department of Energy has so far spent $1.2 billion on SMR research and development and is projected to spend nearly $6 billion over the next decade. Last year, the US Nuclear Regulatory Commission (NRC) certificate NuScale’s VOYGR 77 MW SMR in Poland, the first SMR to be approved in the country.

Center Energy

Market value: $892 million

YTD return: -4.8%

Center Energy Body. (NYSE:LEU) provides nuclear fuel components and services to the nuclear power industry in the United States, Belgium, Japan and internationally.

Three years ago, NRC approved Centrus Energy’s request to produce low-enriched uranium (HALEU) at its Piketon, Ohio, enrichment facility, becoming the first company in the Western world outside of Russia to do so. A year later, the US Department of Energy (DoE) announced approximately $150 million cost-shared award TO American Centrifuge Operating, LLCa subsidiary of Centrus Energy. HALEU is nuclear fuel material enriched to a higher degree (between 5% and 20%) in the fissile isotope U-235. According to the World Nuclear Association, applications for HALEU are currently limited to research reactors and the production of medical isotopes; however, HALEU will be required for more than half of the SMRs currently under development. HALEU is currently only available from TENEXA Rosatom subsidiary.

Although LEU shares are still in the red on the year to date, they are up nearly 60% in the past three weeks after the company signed a deal. nuclear fuel supply agreement with Korea Hydro & Nuclear Power (KHNP). The purchase commitment from KHNP covers a decade of supplies of low-enriched uranium (LEU) to power Korea’s large fleet of reactors.

By Alex Kimani for Oilprice.com

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