Has anyone noticed that nuclear power stocks are going up? Take a look at the charts of nuclear power utility Exelon (NYSE: EXC), uranium producer Cameco (NYSE: CCJ), and Market Vectors Uranium and Nuclear Energy ETF (NYSE: NLR). All three appear to have hit a short-term bottom in mid-July.
I think the reason nuclear stocks have recently revived has to do with the July 13th release of the U.S. Nuclear Regulatory Commission’s Task Force Report on nuclear safety, which was ordered by President Obama in the wake of the Japan nuclear crisis this past March. The report recommends new safety regulations be imposed on nuclear power plants, which was expected, but does nothing to suggest that nuclear power should be shut down, which was the industry’s great fear. With the possibility of nuclear shutdown off the table, investors jumped back in to nuclear power stocks with a vengeance. The two important conclusions of the task force report were as follows:
- Continued operation and continued licensing activities do not pose an imminent risk to public health and safety.
- The current regulatory approach allows the Task Force to conclude that a sequence of events like the Fukushima accident is unlikely to occur in the United States and some appropriate mitigation measures have been implemented, reducing the likelihood of core damage and radiological releases.
Although the NRC Task Force Report makes 12 recommendations for increased regulation, it is not certain that the five-member NRC will adopt them all, or even a majority of them. A final decision won’t occur for at least three months.
Bottom line: nuclear power is here to stay in the United States.
As Energy Strategist lead advisor Elliott Gue points out in the introductory quotation above, nuclear power is here to stay in most of the world. In May, the United Kingdom issued a similar report reviewing nuclear safety and made similar conclusions in favor of nuclear power:
- The direct causes of the nuclear accident, a magnitude 9 earthquake and the associated 14 metre high tsunami, are far beyond the most extreme natural events that the UK would be expected to experience.
- In considering the direct causes of the Fukushima accident we see no reason for curtailing the operation of nuclear power plants or other nuclear facilities in the UK.
- There is no need to change the present siting strategies for new nuclear power stations in the UK.
Similarly, three days after a new nuclear power plant began construction on July 18th, India’s nuclear regulator issued its nuclear safety review report that concluded:
Adequate provisions exist at Indian nuclear power plants to handle station blackout situations and maintain continuous cooling of reactor cores for decay heat removal.
And Russia is totally gung-ho on nuclear power, with Prime Minister Vladimir Putin recently mocking Germany’s decision to ban nuclear power by 2022, stating that Germany will need to buy firewood in Siberia to heat its citizens’ homes.
As for China, it just announced that it has connected its first “fourth-generation” fast-neutron nuclear power reactor to the electric grid. China has almost 20 nuclear reactors in operation now with 30 additional reactors planned by 2020. In fact, China – the world’s second largest economy – has the most nuclear reactors under construction in the world (30 out of 61).
In addition to the 61 nuclear reactors under construction right now, 150 more are planned to come online over the next 10 years. This is on top of the 440 reactors already operating worldwide.
Nuclear Reactors Under Construction Worldwide
The reasons that nuclear power is here to stay despite what happened in Japan are clear:
- Uranium’s cost per kilowatt hour is much cheaper than oil, as well as cheaper than natural gas and coal
- Nuclear power does not produce greenhouse gases unlike fossil fuels
- Fewer people have been killed by nuclear power than any other power source
- Third-generation nuclear power technology offered by Toshiba’s (Other OTC: TOSBF.PK) Westinghouse Electric subsidiary and France’s Areva (Other OTC: ARVCF.PK) makes accidents like those of Three Mile Island, Chernobyl, or Fukushima (Japan) virtually impossible.
For an interesting discussion on the safety of modern nuclear power plants, I highly recommend watching this video where Microsoft founder Bill Gates talks about the fourth-generation nuclear power company he has invested in called TerraPower. What makes TerraPower so interesting is that its nuclear design is completely passive; humans play no role in shutting the power down. He also points out that storage of nuclear waste is safe and cost effective and should not be a deciding factor in whether to expand nuclear power.
Gates also says that if he had the choice between choosing the next ten U.S. presidents and cutting the cost of energy by 75%, he would choose cutting the cost of energy. Affordable energy is that important to the world and nuclear energy is a big part of the solution, which is why he is invested in it.
Elliott Gue, editor of The Energy Strategist, is very bullish on nuclear power and uranium and has strong buy recommendations on several nuclear power-related stocks right now.
To find out the specific names of the nuclear power stocks he likes best, give the The Energy Strategist a try today!
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