Nuclear Energy: The Most Controversial Clean Energy
Contents
Introduction
Time to de-stigmatize
Market forces
Facts and Figures
Investment Opportunities and Market Segments
Market movers
Leaders & fast followers
Investors
VC / PE / Funds
A Chemical Romance
Nuclear could power the future, if we can overlook the past
What’s the first thing that comes to mind when you hear “nuclear”? Chernobyl? Hiroshima? Three Mile Island? Any way you spin it, nuclear energy has a negative connotation behind it. Now, what’s the first thing that comes to mind when you hear “clean energy”? More often than not, nuclear power is ignored in this category, but the reality is nuclear power is the second-largest source of low-carbon electricity in the world. But in order to reap the benefits of this low carbon energy, society must quell its dark history.
Nuclear power comes from nuclear fission, the splitting of atoms to form smaller atoms and thus release energy. Once this energy is produced to create heat, it is used to boil water into steam, which turns the blades of a steam turbine. As the turbine blades spin, they drive generators that make electricity. This powerful chain reaction can be used to continuously supply the power grid—not to mention the water being cooled and reused over and over again to produce steam, thus adding to its overall efficiency.
The first commercial nuclear power plant started its operation in 1957. Since then, nuclear energy has maintained a consistent pace of development as a reliable source of clean and efficient energy. Today, it provides 10% of electricity generation from fewer than 500 reactors. A standard 1,000 megawatt nuclear facility in the US needs only slightly more than one square mile to operate, whereas wind farms typically require 360 times more land area.
The use of nuclear energy continues to be a long-running debate globally. Opponents of nuclear power believe there are serious threats inherent to nuclear energy production, including health risks, safety accidents, and environmental damage, with the accidents in Chernobyl and Fukushima only exacerbating the general public’s concern. However, the truth of it all is that nuclear power could provide solutions for electricity consumption growth, air quality concerns, and the security of energy supply, so it’s important we don’t allow the mistakes of the past to deter the future
Market Trends: Facts, Figures, Forces
Market Facts
Nuclear power plants may be more expensive to build, but are relatively cheap to run, making nuclear energy cost competitive with fossil fuels as a means of electricity generation—and the externality costs such as waste disposal and decommissioning are usually already included in the operating costs.
In 2021, nuclear power plants globally generated 2,653 terawatt hours of electricity.
An additional 55 reactors in 15 countries are currently under construction, thereby increasing the existing capacity by ~15%.
Europe’s green bond market is preparing to finance nuclear energy projects for the first time.
market Figures
The global nuclear power plant and equipment industry generated $41.1 billion in 2020, and is estimated to reach $58.4 billion by 2030, witnessing a compound annual growth rate (CAGR) of 3.5% from 2021 to 2030.
The cost of generating nuclear power ranges from $112 to $189 per megawatt hour.
The International Atomic Energy Agency’s (IAEA’s) projection shows that nuclear-generating capacity will double to 792 gigawatts by 2050 from 393 gigawatts in 2020.
Nuclear power to date has been responsible for avoiding 200 million megatonnes of carbon dioxide (CO2) each year, which is the same as removing 400 million cars from the world's roads.
market forces
In recent years, the policy push associated with nuclear energy adoption has been due, in part, to the “full package” doing so offers, including job creation, 24/7 reliability, long-term sustainability, energy independence, price stability, and greater clean-energy generation than all other sources put together. The Bipartisan Infrastructure Law promises more than $62 billion for the US Department of Energy to help transition into a clean energy economy—one that includes nuclear energy.
$6 billion has been assigned to start a Civil Nuclear Credit Program in which owners and operators of commercial reactors can apply for credits to support their operations.
“The United States views nuclear energy as a pivotal technology in the global effort to lower emissions, expand economic opportunity, and ultimately combat climate change”
Investment Opportunities and Market Segments
Unlocking the true potential of nuclear energy will require further investments in both the machines themselves (e.g., reactors, island and auxiliary equipment) that can harness nuclear fission to produce electricity as well as the fuel (i.e., uranium) for those machines. Investments in nuclear energy have surmounted $44 billion and are expected to reach $45 billion in 2022 and $46 billion in 2023.
Reactors
Nuclear power can play a role in helping developing countries achieve energy security without having to rely on fossil fuels—and reactors are the foundation of this power.
There are investment opportunities to extend the life of a reactor rather than build a new plant. Costs of extensions are considerably cheaper than building a new plant and competitive with other clean energy options.
Many experts have pointed out that the high cost of nuclear power plant production is arguably mostly a function of decades of stagnation and bad policies.
A wave of innovation in nuclear technologies is taking place all over the world, including the designing of small modular reactors (SMRs)
SMRs are designed to be significantly safer and will be much cheaper than current nuclear plants due to their smaller, simplified structure.
SMRs can fit in a 20-foot container and power 200,000 homes at once, which allows them to be mass fabricated and assembled in factories, further driving down costs.
Small Modular Reactors can fit in a 20 foot container and power 200,00 homes at once. Image Courtesy of the International Atomic Energy Agency.
Island Equipment
Island equipment refers to the equipment that makes up the nuclear island. There are multiple investment opportunities in the machines that are implemented into reactors. Island equipment is broken up into two separate sectors:
Heavy equipment: large forged, molded, and machined parts that make up the nuclear island, such as vessels, vessel heads, reactor internals, steam generators, and pressurizers
Mobile equipment: reactor coolant pumps (pump, motor, and sealing systems, shaft seals) and control rod drive mechanisms
Island equipment dominates the market and is projected to continue doing so thanks to its role in operational safety.
Auxiliary Equipment
Investment in auxiliary equipment, including fuel storage and handling, water system, process auxiliaries, etc., is very active.
Controlling temperature—one of the most important aspects of nuclear energy production—means controlling the entire process and requires advanced heating and cooling technologies. Cryogenic skids are designed to generate a thermal fluid flow, to be used inside process machine heating systems, to help in temperature regulation.
The auxiliary equipment market’s share is on the rise. This can be attributed in part to its radiation protection and water purification systems.
Uranium
The fuel nuclear reactors use to produce nuclear fission is pellets of the element uranium.
The world’s power reactors require some 67,500 tonnes of uranium from mines and elsewhere each year.
Reactor fuel requirements are met from both primary and secondary supply sources: commercial stockpiles, nuclear weapons stockpiles, recycled plutonium and uranium from reprocessing used fuel, and to a lesser extent from re-enrichment of depleted uranium tails
Impact
Nuclear power plants produce almost no greenhouse gas emissions during operation.
The use of nuclear power has reduced CO2 emissions by more than 60 gigatonnes over the past 50 years, equivalent to roughly two years’ worth of global energy-related emissions.
Nuclear energy emits 4 times less CO2 than does solar power and 2 times less than hydroelectricity.
The process of mining uranium requires high amounts of energy and results in CO2 emissions.
Market Movers: Current and Future Heavy Hitters
Market Leaders
EDF Group is a French state-owned electric utility company currently operating 56 power reactors in France and is expanding into the UK.
Duke Energy is headquartered in Charlotte, N.C., and is one of America’s largest energy holding companies. Currently, it operates 11 nuclear units at 6 sites in North Carolina and South Carolina.
NextEra Energy owns Florida Power & Light Company, which is America’s largest electric utility. Its nuclear energy facilities provide the equivalent of more than 4 million homes with clean electricity.
TAE Technologies is a nuclear fusion start-up whose unconventional strategy has helped it raise a total of $1.2 billion in funding.
Future Heavy Hitters
Commonwealth Fusion develops energy through inexhaustible power plants using rare-earth barium copper oxide superconductor technology. It has raised $2 billion in total funding to date.
NuScale Power develops an SMR to supply energy for electrical generation and other heating applications. The company has raised a total of $234.6 million in funding.
Phoenix designs and manufactures the industry’s highest-yielding neutron generators and commercialized nuclear technologies for partial applications. The company has raised $26.6 million.
Zap Energy Inc., a Seattle-based start-up company, is developing a next-generation modular nuclear reactor.
Nuclear Generation by Country, 2021
The US and China lead the way, but France is the most dedicated. Over 70% of their total electricity supply comes from nuclear power.
Venture Capital/PE and Other Fund Investors
Nucleation Capital is a rolling fund that invests in early and mid-stage ventures developing zero-emission nuclear energy and carbon-negative technologies in the United States, Canada, and the United Kingdom.
Morgan Stanely’s Next Gen Emerging Markets Portfolio has invested in the world’s largest, lowest-cost, and cleanest nuclear fuel (uranium) mining company: Kazatomprom.
Chevron Technology Ventures’ investment in fusion is an opportunity to enhance the company’s focus on a diverse portfolio of low-carbon energy resources. In 2020, the company took part in a Series A investment in Zap Energy Inc.
Sumitomo Corporation of America, is the largest subsidiary of Sumitomo Corporation, one of the world’s leading traders of goods and services. In 2022, Sumitomo partnered with Google and Chevron to invest in TAE Technologies (see “Market Leaders”).
Final Thoughts
While nuclear energy seems to be a rather obvious solution for our energy future, the past still holds grave concern. The creation of radioactive wastes such as uranium mill tailings and spent (used) reactor fuel can remain dangerous to humans and the environment for thousands of years. However, this shouldn't be a cause for alarm, as, by volume, most of the waste related to the nuclear power industry has a relatively low level of radioactivity. With proper management and storage, nuclear power can be a safe and efficient source of energy production throughout the world.