When a new plan to boost the economy was announced in Beijing this morning, it was a good day for everything related to China. This includes Chinese stocks, commodities, luxury goods makers, and more. I’ll say more about that later.
There is real excitement about nuclear power right now, made even more so by the news that Constellation Energy CEG 0.84% will restart a nuclear reactor at Three Mile Island as part of a power-purchase agreement with Microsoft Corp. MSFT -0.40% and the announcement on Monday from 14 institutions that they will fund the tripling of nuclear energy capacity by 2050.
Right on time, a study from UBS—interestingly, not one of the 14 institutions—says that the nuclear rollout could happen faster. They say that not because they want to reach the goal of doubling, but because there is a need, especially for datacenters to support the growth of AI.
It will take some work. Nuclear power’s share of world power output dropped from 17% in 1990 to 10% in 2021, and a lot of that drop is due to old reactors. Accidents, worries about how to get rid of waste, and, perhaps most importantly, costs have all limited nuclear production.
It also takes a long time to build new reactors. For example, it took 16 years to build a new reactor in Finland. But people are feeling differently. “In a relatively (very) short amount of time, the conversation about nuclear energy has turned completely around.” A new 81-page study from the Swiss bank, written by 44 analysts from around the world, says, “We find it hard to overstate the magnitude of the shift.”
This UBS study says that the technology sector’s demand isn’t the only thing that can move nuclear forward; governments also need to back it up. “We have long said that the private and public sectors can’t solve complex sustainability problems on their own; they need to work together.” Is this a given? “No, but we also don’t want to completely rule it out,” the story says. It is almost the same cost to power a home with nuclear power in China, where the government has pushed the technology.
Based on its research, UBS says that nuclear power can grow at a rate of 2.1% to 3% per year until 2030. That would mean making 1.8 times as much uranium as is currently made by 2030 and 2.9 times as much by 2050.
This is good news for people who are investing in uranium, and the UBS team also finds companies in the supply chain. You can find Emerson EMR -0.10%, Flowserve FLS 1.46%, Fluor FLR -1.14%, NuScale SMR 1.78%, Constellation Energy, Vistra VST 3.48%, PSEG PEG 1.31%, and Crane CR 0.11% on that list in North America.
When it comes to how much a company is exposed to nuclear power, CGN Power (1816) at 2.99%, China National Nuclear Power (601985) at 4.94%, NuScale, and Constellation Energy are at the top of the list with 50% to 100% exposure. Kepco 052690 (0.15%), Centrica CNA (0.29%), CEZ (0.70%), Fortum FORTUM (0.60%), Public Service Enterprise, and Vistra are in the 10% to 50% exposure group.
Aside from safety concerns and cost, another thing that might slow down nuclear power is the development of nuclear fusion. Eni ENI 1.02%, Equinor EQNR 0.28%, and Shell SHEL 0.14% are some of the companies that are putting money into this possibly game-changing technology. “Many existing technologies, including existing nuclear reactors, could become obsolete if and when it becomes commercially available,” they say.
