Email

Nuclear Energy’s (Growing) Rebound Potential

by | published January 16th, 2012

All the talk about Iran's nuclear ambitions and potential military conflict has overshadowed the current dialogue on nuclear energy for peaceful purposes.

What is happening on this front is important – and surprising – to the energy markets.

Following the meltdown of the Fukushima Daiichi reactors last March, many people (quite naturally) thought that prospects for building large-frame nuclear power plants would now be off the table.

After all, close to one year after the disaster, Japan has yet to bring more than a few of its 54 reactors back online.

The central issue for Japan remains the economic impact of weaning itself off reactor-generated electricity. The island nation has no domestic energy resources and has to import virtually all of its oil and liquefied natural gas (LNG). That reality has forced Tokyo to backtrack on its commitment to curb Iranian crude imports only days after saying it would support the new U.S. and European Union sanctions. Between 10% and 15% of daily of Japanese oil imports comes from Iran.

When it comes to energy, the country faces a serious conundrum…

With its nuclear web severely impaired, and no alternative domestic sourcing to turn to, the Japanese economy is rapidly moving into an energy constriction. It faces much higher prices ahead.

And Japan is not alone.

A similar problem now looms in nearby Taiwan, where the fate of its current and future nuclear plans is under debate. The island imports 98% of its conventional energy.

In Europe, under considerable local political pressure, Germany has decided to phase out nuclear power completely. That decision matches similar pledges in Belgium and Switzerland.

Elsewhere, however, the trend is far different.

And it is providing prospects that are creating some more positive estimates by the industry… and, potentially, for investors.

France Takes the Lead

Take France, perhaps the best example of a nation that had committed to nuclear sourcing for its electricity some time ago. About 80% of all power generated in the country comes from its 58 operating reactors.

And rather than deemphasizing the use of its reactors, the French government has decided to spend at least 10 billion euros (about $12.8 billion at the current depressed euro-to-dollar exchange rate) to upgrade its reactors to withstand more severe earth tremors.

Meanwhile in Asia, China has 13 reactors in operation and 28 under construction. The country plans to raise the total to 102 in order to meet its swelling demand for electricity.

India has two reactors in operation (although one was shut down to repair a malfunction last week). The country has seven under construction, with plans to build 20 more.

Vietnam, Indonesia, and Thailand have also announced intentions to develop nuclear power. Even South Korea, despite its close proximity to Japan and local concern over the Fukushima tragedy, continues to operate 21 nuclear facilities and intends to construct an additional 18.

All told, despite the political and environmental moves to end nuclear power, the global increase in reactors was inevitable. According to Sergei Kiriyenko, head of Russia's state atomic energy company Rosatom (and the person overseeing a major nuclear energy buildup of his own), the number of plants worldwide will double in the next 20 years.

The pressure is fueled (no pun intended) by the advancing age of the current nuclear infrastructure. The average operating reactor around the world is now 27 years old. Most facilities require overhauls, refurbishment, and, in some cases, full replacement.

In the U.S., there has not been a new nuclear reactor put into service since 1974. That means the average age is much more pronounced than in the world in general – more than 40 years.

Currently, even with the aftermath of the Japanese tragedy, there are 24 submissions for new nuclear plants under review by U.S. officials.

Assessing the Economic Impact

Last week, the Maryland Board of Public Works approved a wetlands report on the UniStar Nuclear Energy LLC plan for a third reactor at the Calvert Cliffs Nuclear Power Plant.

This would be the first new American nuclear facility in almost four decades.

With no reactors in the U.S. designed to withstand more than a 7.5 quake (Fukushima came in at 9.0), and few in Europe or elsewhere able to cope with such a level, the expense of upgrading plants will be significant.

The 10 billion euro bill announced by France, therefore, is likely just a starting point.

We're going to see a lot of money spent in this sector…

The real issue, of course, is how to offset the adverse economic impact of either upgrading the reactors or dispensing them altogether.

France gives us the first reading in the former case; Germany may be the bellwether in the latter.

Preliminary surveys suggest that German end users will face hefty increases in electricity costs once the nuclear grid is disabled.

For the environmentally sensitive, phasing out reliance on nuclear power may be the preferable approach (and after Chernobyl and Fukushima, good reasons exist for such concerns).

But for an international economy teetering after a recession and still facing a debt crisis in Europe (a meltdown of another sort), questions of cost will continue to plague the nuclear debate.

Meanwhile, companies specializing in nuclear reactor maintenance – led by the French, Japanese, and Russians, and not surprisingly, given their country's domestic commitments – may experience a rise in modernization contracts on existing reactors.

If you consider only operating and not construction costs, nuclear power is cited as the cheapest source of electricity. But rising costs in refurbishment, repair, and upkeep have begun to take their toll. These costs are reducing the economic advantages nuclear maintains over other renewable/alternative energy sources.

In the end, this means the real beneficiary from this ongoing drama may ultimately be solar, geothermal, and wind power companies.

Sincerely,

Kent

Please Note: Kent cannot respond to your comments and questions directly. But he can address them in future alerts... so keep an eye on your inbox. If you have a question about your subscription, please email us directly at customerservice@oilandenergyinvestor.com

  1. Bill
    January 16th, 2012 at 13:29 | #1

    The Palo Verde Nuclear Power facility in AZ, the country’s largest I believe, came online in the mid ’80s.

  2. Alexander Zuendt
    January 16th, 2012 at 13:33 | #2

    Calvert Cliffs is far away from being constructed. The EPR design for that unit has not been approved by the NRC. The first two plants being built in the US are Vogtle and VC Summer who are in the process of getting NRC approval for their combined operating license.

  3. Nanoo Visotor
    January 16th, 2012 at 13:35 | #3

    A rebuttal of an anti-nuke, supposedly peer-reviewed health “study” that claimed excess deaths in the US, from Fukushima: http://www.jonbarron.org/natural-health/fukushima-reactor-fallout-Japan-mortality

  4. Gordon Montgomery
    January 16th, 2012 at 15:35 | #4

    How does Kent feel about the future use of Thorirum which is supposedly cheaper,safer, has much less chance of nuclear accident, and the spent material is easier to deal with. Yet there seems to be very little discussion about its use. Is there some problems with thorium?

  5. matt oconnell
    January 16th, 2012 at 15:42 | #5

    What about AEHI for building in Idaho?

  6. DAle saner
    January 16th, 2012 at 16:57 | #6

    Kent,
    You did not address the newer forms of nuclear energy, such as Lightbridge’s Thorium. Cheaper and so much safer. I expect Lightbridge or some competitor will sooner or later make a big inroad to the nuclear power scene.
    http://www.ltbridge.com/
    http://www.ltbridge.com/technologyservices/fueltechnology
    http://www.ltbridge.com/technologyservices/fueltechnology/advancedtechnologiesintro

  7. Vern Rose
    January 16th, 2012 at 17:09 | #7

    Re: Jan. 16, 2012, Nuclear Energy’s (Growing) Rebound Potential.

    Cracks in the containment walls of our Nuclear Power Plant in Citrus County, Florida have kept it out of commission for a number of years. The cracking problem is problematic and for years the backup system has been burning coal which has a big downside for the public.

    Ironically, they just had hearings in the county immediately to the North of us on a Nuclear Plant to be built. Naturally there were a lot of concerns about the environment voiced. But to my knowledge I know of no study comparing cost of nuclear to plentiful and cheap natural gas.

    Dr. Moors, am I correct in thinking that with Americas great wealth in natural gas we should be building gas burning power plants rather than nuclear.

    Thank you for your consideration,

    Vern Rose

  8. January 16th, 2012 at 17:17 | #8

    i need a help

  9. John pembor
    January 16th, 2012 at 17:48 | #9

    If the cost is less to discontinue nuclier power than to refurbish the current plants and America is in debt over there heads-what is the debate about. Put up wind mills all over as in Holland.

  10. john gornall
    January 16th, 2012 at 19:44 | #10

    I believe the most likely new nuclear facility to be built in the US will be Vogtle Units # 3 and # 4 in SE Georgia. The federal government approved an $ 8 Billion Loan Guarantee.

  11. Ann
    January 16th, 2012 at 20:02 | #11

    There are approximately 12 aircraft carriers and nuclear submarines patrolling the globe. They operate without disasters, deaths, accidents, fuel leaks, at least not reported. These reactors generate power to service over 5,000 men and equipment for long periods at sea especially the submarines. If these nuclear generators
    are so efficient and require little maintenance, why can’t they be used in the local economy to service remote and small communities as well as large centers???.

  12. jr n hkkdo
    January 16th, 2012 at 21:50 | #12

    I live in northern Japan (retired American) and constantly see the huge extent of geothermal energy reservoirs in Japan. Strangely (to me), there appears to be no plan to tap into geothermal energy in a major way as a replacement for nuclear power, which the Japanese are very frightened of now. I would like to hear Dr. Moors’ comments on whether there is a technical limitation in new/current geothermal power generation technology that is preventing Japan from turning to geothermal to replace nuclear. Geothermal is virtually everywhere in Japan, or at least prevalent enough that batteries of geothermal power plants could easily tie into their electrical grid and feed the entire nation.

  13. Malcolm
    January 16th, 2012 at 23:19 | #13

    Kent, Interesting article. The cost of nuclear generated electricity including capital costs is the lowest cost of all forms of generation. Many of the existing plants in the USA have long since paid off their borrowed capital and are operating at capacity factors well in excess of 95% which means they operate at full power 95% of the time. Windmills only operate 20% of the time. Nuclear Plants are making money hand over fist for the utilities that own them. In total there are 62 new reactors under construction world wide – a good reference source is the World Nuclear Association website. Tennessee Valley Authority has completed construction of the two Watts Bar power plants and is starting on Bellefonte whose construction was abandoned after Three Mile Island.
    Of course all of these power plants need Uranium Dioxide and there is a massive shortfall between mined supply and demand. The difference is coming from a warheads destruction program that ends in 2013.
    This is the perfect storm for Uranium investing. Companies heavily marked down due to the perception that nuclear is finished. A shortfall between supply and demand and only a few companies sitting on the lions share of Uranium supply. This is the perfect contrarian investment play and I would encourage all your readers to buy Cameco, Paladin, Uranium One and Uranium Participation Corporation now before the rest of the world realises nuclear is very very far from being done. Exactly the reverse is true.

  14. Malcolm
    January 16th, 2012 at 23:38 | #14

    On another note, it is common practice for those opposed to nuclear power to overemphasize the risks and downplay the benefits of emissions free nuclear power. Exposure to radiation occurs naturally via cosmic rays from space and from radioactive materials in the earth’s crust that were there long before humans arrived on the planet. It does not cause serious health effects unless the doses are enormous many times higher than doses from Fulkushima. While the release of radioactive materials from Fukushima is of great concern to everyone in the nuclear business (and above regulatory limits) it is nowhere near the levels that will cause the population serious health effects. There have been zero fatalities as a result of radiation exposure at Fukushima even amongst plant workers who have received doses significantly above approved levels.
    As an investor I read the hype and the hyperboli of the media and continue to stock up on nuclear shares. China, India, Russia, Finland, UK, South Korea – even the United Arab Emirates – are rapidly expanding their nuclear fleets and have not stopped as a result of events in Japan. As usual the media and business talking heads miss the point and stock prices are driven down by irrational fear. The result is shares in nuclear miners and related companies are at bargain basement prices. It is going to be so much fun watching the inevitable run up in Uranium prices happen right on cue in 2013 when the shortage of supply hits the inevitable increase in demand.

  15. H. Segelstad
    January 16th, 2012 at 23:47 | #15

    If one considers externalities costs,or total life cycle costing, from developement of the uranium mine to disposal of radioactive waste, you will find nuclear to be twice as expensive as alleged by the developers.These are costs paid by the public but out of sight.
    Harold Segelstad
    Director of Renewal Energy Program,retired
    Pacific Gas and Electric Co.

  16. Jeff Pluim
    January 17th, 2012 at 12:20 | #16

    In September the physicists at the CERN facility outside Geneva, announced that they clocked a neutrino travelling faster than light. That confirmed my equations E=(RAe)MC^2 and E≠MC^2(AeV).
    They re-did the experiment in October and reconfirmed their original results. One of the implications of this is that radio-activity, like that in spent nuclear fuel rods and in nuclear disasters such as Fukushima, can be neutralized. I copyrighted my equations early in 2011, expecting that someone would finally figure it out and that I would be on the leading edge. I especially figured that when the physicists at CERN clocked a FTL neutrino, someone would take notice of my paper and my predictions. But even though CERN confirmed my predictions and theories they still have not figured out WHY it is that they got those results. I feel like Copernicus telling the world that the sun is not orbiting the earth. When physicists finally pull their heads out of their own rear ends, then we will all be able to use this new knowledge to make all nuclear power plants safe enough for babies to pay around, and be able to neutralize the effects of, and possible even the actual initial explosion of, a nuclear bomb. I am happy to send my paper to anyone who requests it at jeffpluim at hotmail.com
    I am not a formally trained physicist and my paper is not in their standard format, but I believe that the information is important for humankind.

  17. Malcolm
    January 17th, 2012 at 13:48 | #17

    Jeff, I have long held that belief that radioactive materials can (and will) be neutralized in years to come and I am so pleased that there is at least one other person that shares my view.If you have that technology my friend you are a billionairre. Every nuclear utility in the world will be beating a path to your door as it is so incredibly costly to store these materials for the length of time required….even though you can handle a radioactive fuel bundle after about 100 years. It will also allow the extraction of all the “waste” uranium currently sitting unused in radioactive fuel bundles. In a rector only 2% of the available U235 atoms are fissioned leaving a stunning 98% unused. That means we have only used a small fraction of the energy available from materials already dug out of the ground thus extending the available fuel supply by a factor of 50.
    On the CERN project where the nuetrinos travel faster than light – this is NOT a violation of Einsteins theories. Einstein was careful in saying that you could not travel AT the speed of light. He did NOT say you cannot travel faster than the speed of light or that you can only travel slower than the speed of light. Clearly there is a mechanism yet unknown that allows particles to travel faster than the speed of light without ever having traveled at the speed of light. Don’t ask me to explain that because I cannot but that is what appears to have happened.
    Good luck with your radioactive materials neutralization project.

    Malcolm

  18. Dorothy Lock
    January 20th, 2012 at 18:18 | #18

    Dr. Moore: I hope you will write an article soon on Thorium Fluoride in a nuclear reactor instead of uranium.

    Like Gordon Montgomery and DAle Saner, I’ve also recently read about thorium as a substitute for uranium in reactors. There are a few small companies such as Thorium Power LLC working on it. Both India and China have taken it up; China has several patents on it. Thorium (atomic #90) plus Fluoride (atomic #9) is stable and can’t be used in bombs. These form a stable, abundant, inexpensive, non-polluting, transportable energy source. Sounds good to me.
    Sources of info: http://www.greeneforoffice.org
    http://nvthorium
    http://www.ThoriumEnergyAlliance.com
    There is a bill in Congress by Senator Reid Phone#1-777-686-5750 and Senator Hatch Phone#1-801-524-4380 to include this in the Nuclear Regulatory Commission’s policies.
    Finally, there will be a conference in Washington, D.C. on 5/3/12 of the Thorium Energy Alliance to inform and advertise this energy source.

  19. enthusceptic
    February 1st, 2012 at 09:32 | #19

    I think the “jury is out” on Thorium, because the technology isn’t ready?
    Ann, your argument is thin at best, because the reasons for using nuclear power in a military context is different than using it for “normal” electricity generation.
    When all costs are factored in, maybe nuclear for producing electricity isn’t so much cheaper than the alternatives? The main “competitors” are nat. gas – NG – and coal. I haven’t heard about exporting coal from North America – probably not a good idea – but exporting as much NG as possible helps clear the glut, support the price and develop the world, creating investment opportunities.

  20. enthusceptic
    February 1st, 2012 at 09:43 | #20

    Malcom, you are of course right, when we can get more power out of “spent” uranium, and also store solar and wind power, that will be an energy revolution like none seen before.

  21. enthusceptic
    February 1st, 2012 at 10:13 | #21

    Jeff, I’m not sure which planet you are from and don’t have time to read your paper, but it’s essential that we try to understand science, global trends etc.Thank you for explaining!
    We absolutely need to understand macro trends before investing.Just a few graphs, stats and some company history is not enough.

  22. enthusceptic
    February 1st, 2012 at 10:48 | #22

    Sorry, Mr Segelstad, wrote my comment before reading yours. It’s of course all those”hidden” costs that makes nuclear power expensive.

  1. No trackbacks yet.
Comments are closed.