As we release our first edition of the Market Report, we’d like to set some expectations for our followers on what to expect from this newsletter. Each month, we will release one article that covers some of the most market-changing industries that are still likely in early-adoption phases. Many of these industries will have severe challenges harboring their ability to become a “new normal” for the world. However, we will do our best to be as transparent as possible about the developments in the respective industries. By reading these articles you will gain succinct knowledge about markets that many may have not heard about. Most of all, we give you the opportunity to learn something new today, and perhaps “beat the crowd” to investing in some of these revolutionary companies. The first market we will focus on is nuclear energy.
Nuclear Energy Market Report – July 2021 Edition
Nuclear Energy
The first topic we will cover is nuclear energy and its phase in the adoption cycle.
The Problem
Over the past decade, the need for clean energy has continued to pick up steam. The government’s focus on establishing a clean energy infrastructure has been a large hurdle for the entire industry. Many different solutions have been created that CAN fix this problem. However, the solution will have to be scalable and make sense economically.
Solar, wind, hydropower and biomass are a few of the most talked-about renewable energies available. Recent government subsidies have continued to show the public’s support for these new technologies. However, nuclear energy seems to be left out of the conversation much of the time.
By no fault of our own, nuclear incidents seem to have lifelong impacts on the world’s vision of the industry. Disasters such as Chernobyl in Russia, Fukushima in Japan, and countless smaller incidents here in the US, have all left a bitter taste in the mouths’ of many investors. But, technology in the sector has continued to improve. A simple search on Wikipedia shows the most recent nuclear incident occurred in 2011. So, safety precautions have begun to prove valuable for these energy providers to remain environmentally responsible.
The Solution
Let’s take a look at a few numbers…
- In April 2021, 9% of the US’ primary energy consumption was a product of nuclear electric power.
- In a chart released by the EIA in 2019, Nuclear had the 2nd lowest Total Operating Expenses of 23.73 Mills per Kilowatt Hour, following hydro-electric energy holding a figure of 10.80 of the same measurement
- Nuclear has the highest capacity factor of all renewables, sitting at 93%. Meaning, nuclear power plants are able to produce at maximum power 93% of the time during the year. While solar, wind, and hydropower are able to produce at 25%, 35%, and 42% respectively.
- Nuclear energy provides nearly 55 percent of carbon-free electricity in the United States, more than any other renewable source.
- Most nuclear reactors use “enriched” uranium, meaning the fuel has a higher concentration of uranium-235 (U-235) isotopes, which are easier to split to produce energy. When uranium ore is mined, it averages less than 1% U-235.9. This means that efficiently mining uranium from the ground can prove costly and difficult.
All of these numbers show that nuclear energy is one of the most effective renewable energy sources available. Due to its ability to constantly produce energy, nuclear reactors are able to produce consistent, manageable amounts of electricity in all kinds of environments. As these technologies continue to become more effective, it will be interesting to see how public companies are able to hold market share from companies that focus on other renewable processes.
Top Companies in the Nuclear Energy Market
TerraPower – A Nuclear Energy Innovation Company
TerraPower is a leading nuclear company that plans to improve the world by developing new ways to produce nuclear energy. Its main goal is to develop technologies that benefit the environment and human health.
The company was founded by some of the top minds in nuclear science, engineering, business development and project finance. Not to mention, Bill Gates is the Chairman of the Board. With this All-Star lineup, TerraPower has been able to develop three cutting-edge technologies that make nuclear technology safer, more cost-effective, more adaptable, and more resistant to proliferation.
These three technologies are Natrium™ Reactor and Integrated Energy Storage, Molten Chloride Fast Reactor Technology, and Traveling Wave Reactor Technology. Once again, the main advantage that nuclear energy offers is zero-carbon emissions and 24/7 output capability. All three of these breakthrough projects have created a pathway to create clean, stable energy while using cost-effective inputs. Their most proud development is the Natrium™ reactor. This project allows areas with no wind, water, or solar availability to produce energy with molten salt powering the reactor. Then, the energy system can be linked to a power grid to distribute energy to the surrounding area’s population.
Most recently, the U.S. Department of Energy awarded $80 million to TerraPower and some of their partners. The goal will be to demonstrate the usefulness of the Natrium™ reactor and its integrated energy system.
For more information on TerraPower’s projects, you can visit their website here.
Centrus Energy Corp. (NYSE: LEU) – Nuclear Energy Leader
Centrus Energy is a trusted supplier of nuclear fuel and services for the nuclear industry. Currently, they offer a mixed-bag of services. The company is focused on being a diversified supplier of enriched uranium fuel, a trusted partner when decommissioning facilities, a thought-leader for companies looking to create new engineering designs, and a leading developer for creating enriched uranium. They continue to assist their customers reduce fuel costs with these tailored products and services.
Get Weekly Updates
Sign up for our weekly newsletter for news, insights, and the latest investment details.
Of that list of responsibilities, creating enriched uranium is paramount to their ability to provide long-term value. In September of 2020, TerraPower (covered above) announced its plans to team up with Centrus to establish commercial-scale production for high-assay, low-enriched uranium(HALEU). HALEU has been recognized as a pressing need for nuclear energy companies looking to fuel many next-generation reactor designs. HALEU is enriched between 5-20%, whereas current uranium is only enriched up to 5%. Most importantly, this higher density uranium will allow developers to optimize their systems’ durability, efficiency, and fuel utilization.
Centrus partnered with the US Department of Energy in 2020. Over a three-year demonstration project, the company looks to manufacture 16 advanced centrifuges for deployment. If successful, this will send a confident signal to vendors that there will be a domestic capability to produce a high-demand of HALEU.
Other Leading Companies:
- Commonwealth Fusion Systems
- Lightbridge (NASDAQ: LTBR)
- Cameco (NYSE: CCJ)
- BWX Technologies (NYSE: BWXT)
- Skyharbour Resources (OTC: SYHBF)
To conclude…
The Investor Weekly sees the nuclear market as a potential winner of the ESG-focused investing that could continue over the next decade. As companies and countries look to move to zero-carbon emissions, nuclear innovations will continue to provide the most efficient production of energy. Above all, we look at this is as a long-term investment thesis, and expect continued volatility on the horizon. In conclusion, as more players will likely step into this space, it is the market leaders with established success in the industry that will provide a great opportunity in the nuclear market.
Sources:
https://www.eia.gov/energyexplained/renewable-sources/
http://css.umich.edu/factsheets/nuclear-energy-factsheet
https://www.terrapower.com/about/
https://www.terrapower.com/our-work/natriumpower/
https://www.energy.gov/ne/articles/what-high-assay-low-enriched-uranium-haleu
https://www.centrusenergy.com/
Disclosure: I am/we are long LEU. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it and I have no business relationship with any company whose stock is mentioned in this article.