Nuclear Energy Will Be in the Forefront in 2016
Nuclear energy stocks may not be the talk of Wall Street, but nuclear energy will be at the forefront in 2016. This is true for many reasons. First, many nuclear energy stocks have not really recovered from the fears surrounding the Fukushima disaster back in March 2011, so they remain bearish. At the same time, a large number of nuclear energy deals have been signed of late. Many are poised to start construction and many nuclear energy deals are in the works.
This bodes well for nuclear energy stocks in 2016.
A Return to Fukushima
“Chernobyl,” “Three Mile Island,” and “Fukushima” are some of the more popular events that get tossed around from the anti-nuclear corner. But some of the current fearmongering is clearly overstated.
For example, following the 2011 Fukushima nuclear disaster, and after a magnitude 9 earthquake, tsunami, and 60 aftershocks (magnitude of 6 or greater), the International Atomic Energy Agency confirmed no radiation related deaths or acute effects in the 25,000 workers at and around the site. (Source: Sun and wind can’t match nuclear power, theaustralian.com.au, October 19, 2015.)
On top of that, plans to return evacuees was accelerated. All the food produced in Fukushima has been found to be below Japan’s contamination levels, which are the toughest and most stringent in the world, and the seawater contains no traces of radiation.
This does not mean nuclear energy is not dangerous. But it does mean that the technology is getting better. Today’s nuclear energy design, construction, and maintenance is far more advanced than it was just 20 years ago. Like all industries, nuclear energy has evolved and become cheaper, more efficient, and more safe.
Is Nuclear Energy More Green Than We Thought?
When put on a level playing field, wind and solar power cannot compete with nuclear power. Keep in mind, wind power is not generated on calm days and solar power is not generated at night. To function, the world needs conventional nuclear power plants to generate consistent energy. (Source: Sun, wind, and drain, theeconomist.com, July 26, 2014.)
Nuclear energy is also not the nemesis to the green movement the way many people think it is. One major study compared nuclear energy, wind, and solar energies. It found that nuclear-power plants, which run at around 90% of capacity, avoid roughly four times as much CO2 per unit of capacity as wind turbines, which run at just 25%. Nuclear also avoids six times as much as solar does.
With a carbon price of $50.00 a ton, nuclear energy avoids more than $400,000 worth of carbon emissions per megawatt of capacity, compared with $69,000 for solar and $107,000 for wind.
Admittedly, nuclear power plants are expensive, costing tens of billions of dollars. But because they run all the time, they are only 75% more expensive to build and run per megawatt than a solar power plant.
If you tally up all the costs, solar is, according to the study, the most expensive way to reduce CO2 emissions followed by wind. The most cost effective zero-emission technology is nuclear power.
The Resurgence of Nuclear Power in 2016
Despite the backlash, more and more nuclear power plants are being built around the world. According to the World Nuclear Association, there are 437 nuclear power reactors operating in 31 countries plus Taiwan. In 2011, they provided 2,411 kWh, or more than 11% of the world’s electricity. A typical 1,000 megawatt (MWe) reactor can provide enough electricity for a modern city of up to one million people. (Source: world-nuclear.org, October 20, 2015.)
But that’s not enough; the world’s demand for energy continues to grow at twice the speed of use. Over 60 power reactors are currently being constructed in 13 countries plus Taiwan, notably China, South Korea, UAE, and Russia. In all, more than 160 nuclear power reactors are planned and more than 300 are being proposed.
In addition to the five currently under construction in the U.S., there are plans for five new reactors. In Finland, construction is underway on a fifth nuclear reactor with plans for another one. France is building a reactor that should come on line in 2016, while Slovakia will complete one in 2017. Tiny Belarus is building two large reactors.
In Russia, six reactors are under construction with about 30 more planned, increasing the country’s power capacity by 50% by 2030. China has 26 operating reactors with 24 additional reactors under construction. Close behind is India with 21 reactors in operation, six under construction, and 20 more are planned.
Most recently, the U.K. and China signed an accord that will give China a stake in Electricite de France SA’s Hinkley Point project, Britain’s first nuclear plant in 30 years. At $37.8 billion, it is the most expensive atomic energy station ever. The Hinkley project is expected to be fully operational in 2025. (Source: China to own a third of Hinkley Point nuclear power station, Telegraph.co.uk, October 20, 2015.)
Oil behemoth Saudi Arabia signed an agreement with Hungary. The country signed similar agreements earlier this year with Russia and South Korea. In 2014, Hungary signed a nuclear deal with Russia’s Rosatom to expand its sole nuclear plant with an $11.0 billion loan from Moscow. (Source: Saudi Arabia and Hungary sign nuclear energy pact, middleeasteye.net, October 20, 2015.)
Saudi Arabia, which is trying to diversify its energy sources, currently gets all of its electricity from oil and gas. Moreover, demand is growing between six and eight percent annually.
In June, France and Saudi Arabia announced a feasibility study for building two nuclear reactors. Saudi Arabia has reached additional cooperation pacts with China, Argentina, and Finland.
Nuclear energy isn’t going anywhere. And the following stocks could capitalize on the global resurgence and need for nuclear energy.
Top 9 Nuclear Energy Stocks for 2016
Excelon Corporation (NYSE:EXC)
Exelon Corporation (NYSE:EXC) is one of the largest U.S. power generators in the country. With a strong presence in the Midwest, Mid-Atlantic, Texas, and California, Exelon is the largest owner and operator of nuclear plants in the United States, where it owns 25% of all nuclear reactors. (Source: Sustainability Report 2014, exceloncorp.com, last accessed October 20, 2015)
It distributed electricity and gas to 7.8 million customers in Illinois, Maryland, and Pennsylvania. Moreover, it holds power assets of 32,265 megawatts of which 19,316 megawatts, or 60%, is nuclear.
Exelon has been the top-ranked electric and gas utility on the FORTUNE 500 every year since 2008. Exelon ranked among the top five U.S. utility companies in Newsweek’s 2015 Green Rankings. It was also named to the Dow Jones Sustainability North America Index for the ninth year in a row in 2014.
In 2014, the company had operating revenues of $27.4 billion, assets of $80.0 billion, and provided and annual dividend of 4.11%, or $1.24 per share.