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Nuclear power is a growing force “intrinsically tied to National Security” according to the U.S. Department of Energy, making it a force in global economics, politics and beyond. In recent decades, the U.S. has ceded its competitive advantage in nuclear energy to China and Russia— something that politicians and industry leaders alike seem motivated to rectify. That’s a big deal considering that the global market for nuclear power could triple by 2050. Much of this growth is anticipated to come from increased demand from emerging markets. The opportunity in engaging emerging markets with exported nuclear energy extends beyond financial. Nuclear agreements can translate to long-term strategic relationships, which is no surprise when you consider that the construction, operation and decommissioning of a nuclear facility can take years.  If the U.S. can take a leading role in developing these markets, it could both help to ensure national security and a leading role in the global energy marketplace. But, Russia and China are both vying for the same position, increasing their nuclear production and developing relationships around the world. China, for example, has added 21 reactors in the past 5 years, with 19 more in the works. China also recently revealed its first domestically developed nuclear reactor. According to the China National Nuclear Corporation, the reactor can generate 10 billion kilowatt-hours of electricity each year and cut carbon emissions by 8.16 million tons.  Nuclear power is a highly competitive industry with long-lasting implications. Here’s what investors should know. 

What Is Nuclear Power?

To understand the importance of nuclear power, it’s important to understand the basics of how nuclear energy is generated. According to the U.S. Energy Information Administration: “Nuclear energy is energy in the core of an atom. Atoms are the tiny particles in the molecules that make up gases, liquids, and solids… An atom has a nucleus (or core) containing protons and neutrons, which is surrounded by electrons. Protons carry a positive electrical charge, and electrons carry a negative electrical charge. Neutrons do not have an electrical charge. Enormous energy is present in the bonds that hold the nucleus together. This nuclear energy can be released when those bonds are broken. The bonds can be broken through nuclear fission, and this energy can be used to produce (generate) electricity.” Nuclear power plants conduct nuclear fission, which splits atoms apart to release energy. (Uranium is commonly used for this process.) The energy that is released in this process presents itself in the form of heat and radiation.  Nuclear energy is notably different from chemical burning, which produces carbon output. 

Why Invest in Nuclear Power?

Nuclear power has long found opposition from environmentalists specifically because of the challenges associated with disposing radioactive waste. Even so, it’s anticipated that nuclear energy may play an essential role in a no or low-carbon energy future.  That’s right, nuclear energy is arguably more sustainable than natural gas and other fossil fuels.  In recent years, moving energy sources from coal to natural gas has been a key step toward decarbonizing. Switching from coal to nuclear power, however, is more “radically decarbonizing.” In fact, the only greenhouse gases released in the production of nuclear power are those associated with the “construction, mining, fuel processing, maintenance, and decommissioning” of a plant.  Another perk of nuclear power plants is that they offer a much higher capacity (that is, a greater percentage of time that the power plant spends producing energy) than both renewable energy sources and fossil fuels.  Consider that in the United States in 2016, “nuclear power plants, which generated almost 20 percent of U.S. electricity, had an average capacity factor of 92.3 percent, meaning they operated at full power on 336 out of 365 days per year” (with many of the days not in operation used for maintenance). This is much different than other power sources including U.S. hydroelectric systems, which delivered power only 38.2 percent of the time (138 days per year); wind turbines, which delivered power only 34.5 percent of the time (127 days per year); and solar electricity, which delivered power only 25.1 percent of the time (92 days per year), according to information provided by the U.S. Energy Information Administration. Coal and natural gas plants generally only generate power about 50 percent of the time.  In this sense, nuclear energy generation is more reliable and efficient.  So, do fewer carbon emissions and greater capacity outweigh radioactive waste? It can.  First it’s worth mentioning that non-nuclear energy, like coal, actually releases some radiation. Secondly, radioactivity decreases over time, unlike the waste products of other energy-production methods. Currently, interim storage facilities are used to manage nuclear waste until its radioactivity is decreased such that it can be disposed of. Storage containers, age, however, and when they do, they can leak toxic materials.  But, new technology is offering better storage solutions. Specifically, storage of waste in deep geological repositories is more secure and environmentally friendly. In Finland, the world’s first ever deep geological repository for spent fuel is under construction. The repository, named Onkalo, “is a game changer for the long-term sustainability of nuclear energy,” according to Director General Rafael Mariano Grossi.  The facility is roughly 450 meters below ground level and will collect all of the spent fuel from Finland’s nuclear power reactors for thousands of years. This is remarkable considering that sustainably developing nuclear power is anticipated to be an important step in preventing climate change.  Investors should know that even in a politically divided America, both “congressional Republicans and Democrats have shown their support for a robust domestic reactor fleet and for a strong civil nuclear export program,” according to EnergySource. As the U.S. ramps up its efforts to meet climate change goals, investors have the assurances of a growing and evolving nuclear energy market.  [/vc_column_text]

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