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Nuclear Outlook 2018

Written by Meg Dailey
Posted October 20, 2017 at 8:00PM

The device you’re reading this on... how much charge does it have left?

You may want to plug in next chance you get. And if you’re already plugged in, take a quick look at your charging cable for me.

Now, if you’re like 90% of Americans, you don’t really wonder where the energy flowing through that cable comes from day to day.

I’d be right there with you if it weren’t my job to write about this stuff.

Generally, the electricity that powers your phone, computer, tablet, or Apple Watch (can you read this on an Apple Watch yet?) doesn’t really matter until you’re looking at the bill.

If you’re among the small percentage of people who do consider where the energy comes from, you may think — or hope, at least — that it’s being sourced from clean energy.

Today, you’d be about 35% right.

That’s about how much energy the U.S. produces from clean sources. The rest is fossil fuels, mostly natural gas and coal.

Of those clean sources, however, there’s one that has a worse reputation than even the dirtiest fossil fuel: nuclear.

Nuclear power still accounts for a whopping 20% of U.S. energy production.

If it makes you uncomfortable to think that nearly one-fifth of the energy you use every day comes from nuclear power plants, you’re not alone…

The Facts of Nuclear Energy

As much as I believe nuclear is a valuable asset to the energy industry, it’s not hard to see why it’s gone out of style, so to speak.

One only has to mention the names Chernobyl, Fukushima, or Three Mile Island to remember just how dangerous nuclear power can be if left unchecked.

But here’s the thing: nuclear is actually statistically really safe.

It’s just that when it’s unsafe, it’s really, really unsafe.

Which has put the entire nuclear industry in a tight spot.

You see, there are really only two things keeping nuclear from being the global energy powerhouse that the U.S. thought it would be less than 50 years ago:

  • Fear of meltdowns

  • Massive price increases

In fact, the first one is the cause of the second!

Let me explain what I mean...

When they were first released to the public, cell phones cost just under $4,000 for a device that had precisely two functions: to make and answer calls.

Over the years, the technology got better. But more importantly, the production lines got better, until we were able to buy these useful if not essential devices for just a few hundred dollars.

Barring the ever-rising cost of an iPhone (I’m not saying $1,000 is a ridiculous price for a phone, but I'm also not not saying it), that’s generally how technology works. It’s expensive at first, but as time goes on and it becomes more mainstream, the price drops.

Nuclear, however, went in the opposite direction.

As more stigma built up around it, the price to build a reactor increased dramatically. The most recent new builds have ended up costing billions of dollars more than originally planned.

This is in large part because new reactors have to adhere to stricter safety regulations than ever before. It’s an understandable if unfortunate result of progress.

But it’s led many to believe the industry at large is in decline.

The U.S., for example, once the #1 investor in nuclear technology, has seen interest in the energy source wane over the past few decades.

The U.S. Energy Information Administration projects that between now and 2020, new nuclear plants and plant upgrades will outnumber plant closures and retirements. However, from 2020 to 2040, U.S. nuclear capacity will begin a slow decline, and after 2040 the EIA expects a major drop as older plants are retired for good.

EIA US Energy Consumption 2040 ChartThe good news is that other clean energy sources, especially solar and wind, helped along by cheap natural gas, will be on the rise and will even end up outpacing coal.

But where does that put nuclear in the future?

Uranium and Thorium on the Move

If it sounds like I’ve just outlined the death of the nuclear industry, don’t worry. This is just the U.S. we’re talking about here.

Admittedly, it’s sad to see nuclear’s biggest fan become its biggest critic, but countries all around the world are bolstering rather than disassembling their nuclear infrastructure.

Even with the U.S. stats in mind, the EIA estimates that nuclear will be the second fastest growing energy source worldwide, right behind renewables.

There are about 440 nuclear power plants in operation today, and 50 more are currently in the works. By 2040, the International Energy Agency estimates we’ll have around 590 GW of nuclear energy online worldwide, up from just 390 GW in 2014.

Most impressive is the lineup of major energy consumers building up their nuclear energy resources: China, India, the United Arab Emirates, and Russia, to name a few.

As such, stocks centered on uranium, the most common nuclear fuel, are looking good to keep climbing for the next few years at least.

A decrease in production of the radioactive metal is even putting us on the fast path to a shortage, meaning we could see prices as high as $60 per pound by next year!

Similarly, thorium has nowhere to go but up. The alternative fuel is the main ingredient in today’s upgraded, safety-oriented nuclear plants.

While thorium reactors are far from mainstream, they offer a viable answer to the problem the nuclear industry faces now.

And, of course, we already know what happens to promising technologies given the time to grow.

You can read a little more about thorium investments here.

Until next time,

Megan Dailey Signature

Megan Dailey

follow basic@energyandcapita

Megan Dailey is a fresh young face on the investment scene. In her years as a research analyst with Angel Publishing, she’s learned that adapting fast to new investment situations is critically important to successfully navigating today’s volatile market. Her research has helped individual investors identify fast-growing companies in the energy industry that pay actionable investors back in spades. In an age of boundless information, her research is razor-focused on the most lucrative opportunities in energy and beyond. Megan’s research can be found in her weekly editorials on the Energy and Capital site. She also manages the Energy and Capital social media, and is always ready to answer your questions about energy investments via Facebook or Twitter!

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