The world is migrating away from fossil fuels and towards renewable energy sources. Recently we highlighted the imapct this move is having on solar stocks and hydrogen stocks. In an effort to reduce the carbon footprint, mitigate greenhouse gas emissions, reduce reliance upon oil, maintain natural resources and improve global air quality, governments, corporations and communities are adhering to new ESG standards and investing a tremendous amount of capital into alternative energy sources. Solar, wind, geothermal and hydroelectric options generate approximately 24% of the current U.S. energy capacity. While these renewable alternatives are expected to provide even more energy in the future, they are not without limitations and issues. And while there are intrinsic concerns, nuclear power should be considered as a viable alternative energy source. Should Nuclear energy continue to bee seen as viable, there are several nuclear energy stocks that will benefit.
Unfortunately, there are a number of issues with the present forms of renewable energy:
Some of these problems will eventually be solved through improved technology, such as reduced environmental impact to manufacture batteries with increased capacities, plus decreased overall costs of production. But even with these eventual advancements, to maximize the benefits of renewable energy the current electricity transmission and distribution system must be upgraded in order to achieve hydrocarbon independence.
The existing electricity grid is an extremely important and complex system. It provides electricity to urban and rural businesses, schools and homes constantly and instantly. The grid generates and transmits electricity every minute, every day, every year. It is quite remarkable! Yet, as the world becomes increasingly more connected and technologically driven, society has become progressively more reliant upon this uninterrupted power source. As recent events have demonstrated, there are a variety of concerns with the present distribution system:
The grid is old. It was originally designed to last about 50 years, but many parts have greatly exceeded that. However, due to the estimated $1 trillion cost, there is little being done to upgrade or replace the necessary power generation plants or transmission lines.
The proposed infrastructure bill may initiate this crucial rebuild, but it appears mired in political negotiations. Cyber attacks occur daily with various hackers attempting to block electricity flows to disrupt our daily lives, lessen defenses or for ransom. Physical attacks are also increasing, as individuals or groups try to destroy the aging framework.
And severe weather patterns possibly exacerbated by climate change – drought, wildfires, ice storms – create well-publicized additional stresses upon the now delicate electric system. These factors are compounded by the seemingly exponentially growing demands of modern businesses and consumers. A new structure is needed.
An alternative future design getting attention is the “Grid of Grids” where the vast present-day model is transformed into smaller localized grids able to act independently or collectively. Individual businesses and consumers will be capable of producing their own energy – through solar, wind, geothermal activities – as well as energy storage through grid-connected electric vehicles.
The local distribution utility will become the platform that will enable and support transactions between constituents, utilizing or selling excess power. In the Grid of Grids, the national grid would carry out interregional balancing when necessary.
No longer would electricity flow in only one direction: from the utility to the consumer. Unfortunately, this new vision would require massive investments of capital and technology to become reality.
As mentioned, there is hope the proposed infrastructure bill may jump start this revitalization. But if it gets bogged down with political posturing, there are parts of the Grid of Grids conception that may be applied. Nuclear power may be an alternative that bridges the gap from today’s fossil fuel-based consumption to complete renewable energy adoption.
When discussing nuclear power, most recall the disasters of Three Mile Island, Chernobyl and Fukushima. The iconic massive concrete cones with steam billowing from their funnels evoke danger and risk. This fear halted any new construction of nuclear plants from 1977 to 2013, when the Nuclear Regulatory Commission approved construction of four new reactors at existing nuclear plants.
Yet despite the prolonged moratorium on plant construction and plant closings (28 of the 132 built between 1953 and 1977), nuclear energy accounts for more than 20% of electricity generated in the United States, which is dramatically more than any of the individual renewable energy sources.
While many criticize and protest against nuclear power, it is vital to satisfy our incessantly growing demand for electricity. And recent technological breakthroughs are altering the size and danger of nuclear generation.
Small modular reactors (SMRs) are the next generation of nuclear power providing nearly limitless electricity without greenhouse gas emissions, and they are more reliable than wind or solar. They produce approximately 20% of the electricity that traditional reactors generate. But that reduced output comes with much lower capital costs to construct and much smaller reactors, possibly as small as a garbage can.
This smaller size allows for increased flexibility where they can be located – improving efficiencies and localized output – and drastically reduces the risk of catastrophic reactor meltdowns. Their design removes the need for the heat removal that large reactors require, which is the main cause for malfunction. Also, their size and design allow them to be placed below ground level, reducing exposure to terrorist threats. The World Nuclear Association lists the features of an SMR, including:
A number of SMR construction projects are at various stages of development in the United States, as well as in Russia and China. These players indicate nuclear energy’s strategic importance. And there are a handful of Nuclear Energy Stocks that appear to be among the leaders in SMR development: NuScale (owned by Flour Corporation (FLR)), The Southern Company (SO), and BWX Technologies (BWXT). General Electric (GE) is also partnering with Hitachi and Terrapower to develop SMRs with two different cooling technologies.
In Summary
While nuclear power generation will have an uphill PR battle, these new reactors appear to be an effective source of energy that will help transition away from fossil fuels and play a complementary role with renewable energy sources while satisfying the world’s growing electricity needs. The public’s fear and concern regarding nuclear power will be resolved by technology, capability and demand.
Emerging alternative energy sources are still in their infancy and nuclear energy stocks will have a lot of room to run.
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