Should You Invest in Nuclear Energy?
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Welcome the money for the rest of us. This is a personal financial on money, how IT works, how to invest IT and how to live without worrying about IT. I'm your host David's stine.

Today is episode five o two. It's titled should you invest in nuclear energy. In late september this year, microsoft and consolation energy announced the day had signed a twenty year power supply deal that included reopening one at three mile island.

This is a nuclear plant in pensylvania. I was recently talking to Christian balkin, who is set of real assets research at my previous advisory firm, F G. advisers.

And we laugh because people, my age, Christians age, when you say three, my island alarm bells go off because in one thousand nine seventy nine, there was a cooling malfunction at three mile island IT LED to the release of radioactive gas. And IT was a turning point in terms of the U. S.

Public perception toward nuclear power. I took a class in high school where we studied what happened at three more island. There have been other nuclear accidents, most recently a in japan, after a major earth cake there, and tsu unama in twenty eleven, there were radioactive releases there as the Operators dealt with the aftermath of the earthquake.

And tuna I in one thousand and eighty six, there is a chernoy accident, which was the result of a flawed reactor design and inadequate training of personnel. Germany announce that they were facing out all the nuclear power generation in one thousand hundred, and ninety five had made up thirty percent of the parent mix by twenty twenty two. IT dropped about six percent.

And they closed their last nuclear reactor last year. We have then, this might lifetime, all these anodos about nuclear power is dangerous. IT causes accidents.

But then I married into a family that where my father, laws and nuclear health physicist, my brothers and sisters in law, nis and nephews all work in the nuclear industry in some capacity. Globally, there are four hundred and thirty seven nuclear reactors, over one hundred and seventy under construction. Nuclear is never gone away, just quietly Operated in the background, with occasional accidents, minor accidents.

In the scheme of things. When you consider that globally, nine percent of global power generation comes from nuclear, thirty five percent coal, twenty three percent natural gas, fifteen percent hydro and thirty percent wind, solar in the U. S.

Or and ninety four nuclear power reactors in my state of eez ona, seventy three percent of carbon free power generation comes from nuclear, and in the U. S, nineteen percent of power generation comes from nuclear energy. That's more power generation from nuclear and from call, which is sixteen percent.

Natural gas makes up forty three percent of para generation. Wind twenty one percent, hydro ten percent, and solar six percent. Nuclear is part of the mix both globally and in the us.

Despite the fact that there have not been many new nuclear para plants in the U. S. The stop rating one has been in service since nineteen sixty nine.

Typically, a nuclear power plant is licensed to last forty years. This is in the U. S.

And then you can renew for another twenty years. And the lifespan is sixty, eighty years. France has one of the largest nuclear power programs in the world.

Nuclear account for sixty eight percent that nation's electricity generation. There are fifty six Operating plants with a new one that came on board this year. Their capacity at sixty one gig goats is second only to the U.

S. And ninety five gigolos. U. S. Is the largest power generation capacity in nuclear of any country in the world.

Now there's new reactor that came on in france, european and pressurized reactor, the first of seven that france has planned out, they're planning on building another six. This one was in the works for years. I was twelve years late and four times over budget, which is one of the knox at nuclear.

Incredibly expensive to build. They are usually late over a budget to the highly regulated area, given the dangers with radiation. But something has changed over the last couple of years, and this agreement between microsoft and conStellation is evidence of that chain.

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S, electricity demand should increase three percent in twenty twenty four, two percent in twenty twenty five. What has changed his AI? The rise of artificial intelligence and the need for data centres is stoking demand for electricity, that in an ongoing climate change, higher temperatures means more demand for air conditioning.

But A I in the demand for data centres due to all the investment in A I is leading to increase demand for electricity and loan. Behold the the vantage of nuclear, including plants that have been shut down, the plant at through my island, that their hope restart by twenty twenty eight, that shut down in twenty nineteen. The nuclear plants, existing ones, are already hooked up to electricity grid.

They're there. In contrast to new solar and wind projects, IT takes an incredibly long time, in many cases, to get them connected to the grid. The weight can be five to fifteen years, but the demand for electricity is now mark hutchins, director of asia at the global high wind energy council, said, I don't know of any country where the grade is not currently some level of obstacle in the energy transition.

The grade is in the wrong place to deliver the power from renewable energy to economic center, said Peter crossly, the professor of power systems at exter university. So we have existing nuclear facilities that are attached the grid. One example is the abc yon in california.

There was a recent podcast and the bg squared podcast where they interviewed marine zolli c who's a VP at the canyon IT cost sixteen billion dollars to build the two reactors that Operate in the application. The site is is pleaded for five or six reactors. Are there only two Operate yet? In california, those both reactors account for eight to nine percent of the energy production.

In california, twenty percent of all renewable s in. While I cost sixteen billion dollars to build these reactors, now that they're built, there are a cheap source of power and cost only six cents a kilo out hour to produce electricity in california, where many retail rates in california are fifty cents or more per kilan hour. Nuclear provides a very efficient and cheap source of what is known as baseload power.

Baseload powers is consistent electricity power generation that can Operate continuously, efficiently for long periods of time. At the public caning, the up time is ninety five percent incredibly high compared to solar and wind. The reality is in us, demand for electricity is increasing domain.

With the us, the world will not be met by renewable, which is why the conversation is changing to a nuclear is being seen as a more positive light. Both the existing plants that are Operating, those that have been close, those that there's trying to reopen and the potential for new ones, which granted are expensive. Just as review, nuclear power plants generate electricity through nuclear vision.

Atoms are split in its usually uranium. Most of the fuel sources in nuclear power is uranium. A new tron hits the new nuclear as of a uranium. Adam is splits that releases energy. That energy then is used to boil water, creates steam, which spins a turbine which generate electricity.

There is a cooling system required to keep the overall plant at a correct Operating temperatures, so there isn't some type of melon from all the heat that generated. There are control rods within the nuclear plan to slow down the reaction or potentially even shut down the reactor. And granted, nuclear power generates high level nuclear waste because these fuel rides that are used used, which are mostly uranium, they become less efficient over time and they have to be replaced.

And that's what leads to the downtime at a nuclear plan. They need to replace the fuel rods and then the fuel rod, because the radioactive have to be stored. Often they are put in water field pools on the site.

That's ppos to be temporary. But there isn't really a permanent high level nuclear waitee story in U. S.

So the spent future basically being stored at the nuclear plants. Now the thing they consider when IT comes to the energy great in the U. S.

Most of its private, the renewables are on private ground. There is some regulation in terms of utilities, but util y's choice of how they want to generate power. The massive investment in oil and natural gas exploration, production, movement, infrastructure is privately generated.

It's driven by the underlying economics. And so when we see coal plants and coal as a percentage of the grid, it's share of production declining. It's because is not as economical as global once there are online or natural gas, which is taken a larger percentage of the grid to meet the demand.

Now all the areas are growing as a mentions, is growing significantly. Its percentage of global power generation, just wind and solar, has gone from ten percent of global power generation in twenty twenty one. That thirteen percent in two and twenty three nuclear went from nine point eight percent down to nine point one percent, partly the shutdowns in germany, but also there just has been growth in the nuclear because of the budget overruns and how regulated is.

So nuclear is the most regulated power generation source of all. And as IT should be because of its great risk. Because power generation in the mix is driven by the private market.

By and large, the turn to nuclear is being driven by economics. Microsoft sign is twenty year agreement with consolation to restart three million because it's economical. It's a cheap source of carbon free energy that already hooked to the grid.

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Come flash, David. Now there are plans, the ongoing development for new smaller nuclear reactors. The company called new scale, based on all again that is building six smaller reactors in romania now that back by U.

S. Government loans. So the government's obviously is still very involved. Other cause I governmental agencies have help finance nuclear power in the past. The the world bank has not provided funding for nuclear power since one thousand nine hundred and fifty nine. So there's been a changed to main for electricity.

The electrification of the grid do do evs, the use of he pumps in terms of the eating people's homes, turning more toward the grid, the A, I investment and data centers is leading to greater demand for electricity. And because the overall demand is growing, the traditional sources of electricity will continue to be in demand even as wind and solar increase their market share. The overall demand is growing that when in solar cannot replace all that demand and IT doesn't have the stable baseload power attributes uh of nuclear because it's just the way whether there is so if an individual wanted to invest in nuclear, how would they do that?

In talking to Christian and I, you're talking about how F G has helps their clients invest in nuclear. And they mentioned, he mentioned pellican energy partners base zero fun. This is a private partnership that i'm invested in through f fig s.

Fund of funds, but they're investing in smaller companies that service the nuclear industry. There's hundred and hundred to them, most of them with revenue less than thirty million dollars. But that's one way to play up.

But most of us can invest with that. So our choices are really, we can invest and underlying fuel uranium through something like the sports physical uranium trust. The ticker is S R U U F.

IT actually holds uranium in the form of you. Three away holds IT. The benefit from the rise in Prices, five point three billion dollars invested in this trust started in twenty twenty one, which was a good time because uranium Price is increased.

We look at the long term Price of uranium tween nineteen ninety and two thousand and three. I didn't really do much. I was less than twenty dollars then as commodities boomed leading up to the great financial crisis, it's Spike to over one hundred twenty dollars about commodities.

As we've talked about in another absolution will linked to a commodate upset in our show notes, often times that IT moves together and we've seen that. So IT IT peaked in two thousand seven at one hundred and over one hundred and twenty dollars per pound. Then uranium fell to forty dollars a pound by twenty ten, then a rebound a little bit up to twenty eleven. And then I fell all back to twenty dollars pound in twenty eighteen.

But given commodities has been more demand than last years and this recent interest in neurons, im this the Price spy to eighty dollars a pound in twenty twenty three and now it's just over sixty pound s brought in their presentation points out that the demand and not going demand, dicky, with the nuclear power plants that have been announced, the supply is insufficient to meet that. And that potentially would drive a higher Price of uranium. There is a uranium futures market.

But with any futures market, the Prices are based on what participants expect. And so in order make money in future, the Prices to go up tired than what's expected, where with this brought physical uranium trust, they own uranium, so they own whole thing is similar to just the only in gold or what they own. The underline commodate and the ideas IT will up in Price and IT, since one ten thousand dollars invested in this trust when I started, would have grown to twenty three thousand eight hundred dollars today.

Now that's one way to invest in uranium. Another way to invest in nuclear is through A, T. F.

That invest in uranium mining, in the production of nuclear components involved in equipment used in uranium. In nuclear industries. The largest e of the space is the global x uranium etf.

Ticker is U R. A. IT launched in twenty ten. Expense is point six nine percent.

Three point four billion dollars invested in IT, but twenty ten was right near the peak of uranium Prices before we had this bare market in commodities. And as a result, from twenty ten to twenty twenty, the C. T, F, lost ninety percent of its value.

And as a result, it's lies. Return since inception is negative five point six percent, but we've had a rebound in uranium. So the E.

S. Returned twenty seven and perhaps and analyzed over the past five years. And if you look at what IT owns, its largest holding is chemical at twenty five percent way.

And then the sprout physical uranium trust makes up nine percent. Then next, energy, uranium energy CoOperation, variety of companies that the other way to do that, you invest in minors and other companies within the uranium and nuclear space. The van accurate im and nuclear etf ticker N L R is another provider.

Bad T F has more utility exposure, so their largest holding is consolation energy. And sports also has some uranium miners etf that you can invest in. U R N M is one which invest in the larger uranium miners. And then there's a sport junior uranium miners yeah the whole investment thesis for investing in uranium in nuclear is that demand for this energy source will continue to increase. That will drive demand both for companies in the space as well as underline uranium commodity.

Recognizing that there is still a lot of opposition to nuclear and that IT takes a long time for these plants come online and the smaller reactors are still in development, we also don't know whether to what extent this whole A I boom in this need for all these data centres will continue. Maybe A I won't meet the last e expectations. Leading to reduce demand for data centers and electricity.

The key take away though is, is nuclear has not gone away. IT remains a key component of the global energy grid once the plants are Operating their incredibly efficient, stable and safe despite a few high profile accidents and its super cheap power. Once IT is there, they're connected to the grid already.

So you more than likely see more nuclear power coming back online. Those that have been cut because the economics are driving IT. So that's an overview.

What's going on in nuclear energy? We invest in IT. I'm certainly give you some thought in my purfoy lio.

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