POWER BACK IN THE MAINSTREAM
February 22, 2006
16% of the world's electricity comes from nuclear power, 80% of the 441
nuclear reactors in operation today are near twenty years old. The demand
for new base load power in both the developed and developing world will
continue to grow and "peak oil" will, sooner or later, only put more
pressure on the grid.
What seems undeniable
evidence of global warming has placed concerns about nuclear power into
perspective. Even James Lovelock, of "Gaia hypothesis" fame and a green
saint, has called for a crash nuclear power program as the only practical
means of bridging the energy gap without producing dangerous levels of
As investors we need to
note that those who invested in uranium stocks in 2004 have been well
rewarded. The question is should we join them.
My guess is that the
yellowcake express hasn't even left the station. The spot price is now
$37.5 a pound: while it pauses, it never corrects.
Some two dozen power
plants are scheduled during the next five years in Canada, China, the
European Union, India, Iran, Pakistan, Russia, and South Africa. In the US
there may be nine new reactor orders by 2007 while Tony Blair is expected
to shortly announce six new reactors for the UK.
Most of the new reactor
designs are third-generation pressurized-water reactors (PWR's), although
companies in China, France, and South Africa are looking to build a
fourth-generation design called a gas-pebble-bed reactor.
The new reactors should
be cheap to build, meltdown proof by design and be able to work for 60
years between refits. The Ontario Power Authority has proposed plans to
build 12 new nuclear plants and the Europeans plan two massive 1600
Russia has several
reactors under construction including an 800MW fast neutron reactor. Iran
is building two Russian-designed reactors, the first of which should go on
line later this year and a South African Pebble Bed Modular Reactor is set
to be completed in 2012.
Japan is building five
new power plants by 2010, and China plans to build 30 nuclear reactors by
2020 at home as well as working on the second of four power plants for
In the future nuclear
power plant construction will be a major Chinese export industry.
India has nine plants
under construction. Argentina, Brazil, Bulgaria, Chile, the Czech
Republic, and Turkey may build two to five PWRs each, while Germany,
Sweden, and Switzerland are re-evaluating their plans to phase-out nuclear
As for the US, changing
attitudes became evident when the 2005 energy bill provided for tax
credits worth $3.1 billion, liability protection and a provision that
allows for compensation for legislative delays for the Nuclear power
industry. Further evidence that things are moving is that the Nuclear
Regulatory Commission (NRC) has certified a new reactor design for the
first time in twenty years, the US power-plant operators preparing
construction and operating license (COL) requests include NuStart Energy,
a consortium of nine energy companies.
Two AP-1000 reactors may
be built in the Carolinas by Duke Energy and another reactor is planned by
Entergy has plans for a
new reactor at River Bend, Louisiana while Scana Corp and Santee Cooper
have filed a letter of intent seeking permission to build two new reactors
near Columbia, South Carolina.
What's unique about
nuclear power is that the cost of fuel is less than 10% of the cost of
plant operations. Uranium oxide at $200 dollars a pound will still be dirt
cheap, replacing as it does thousands of tons of coal.
It's surely not too late
to board the Uranium train.