Summary
- After being essentially flat for the last 25 years, global nuclear capacity is poised for notable growth over the coming decade.
- Over 40 countries have nuclear power in their strategies, and 31 countries have plans to triple their nuclear capacity by 2050.
- While still early days, small modular reactors are also poised to play a meaningful role in the future energy mix.
The latest addition of the International Energy Agency’s (IEA) World Energy Outlook (WEO) is a treasure trove of global energy projections and commentary. For investors in the nuclear space, there were a few key highlights. Most notably, a common element across the WEO’s three key scenarios is the global comeback of nuclear power.
Large Reactors See Momentum
Over 40 countries around the world have nuclear power in their strategies, and 31 countries have signed the declaration to triple nuclear energy by 2050. Signatories include countries with extensive nuclear capacity already, including the U.S., France, and South Korea. Japan,. which has two reactors under construction and 11 in the process of restarting, is also a signatory.
Beyond the restarts in Japan, over 70 gigawatts (GW) of new nuclear capacity is under construction. Approximately half of the new capacity is being built in China, but globally, this marks one of the highest levels of activity for the past three decades, per the IEA.
All told, the IEA models nuclear capacity increasing by at least a third to 2035. This is significant, considering the number of operable nuclear reactors globally has been roughly flat for the last twenty-five years. Small modular reactors (SMRs) are likely to contribute to that capacity growth as well.
SMRs Also on the Horizon
The IEA notes that technology companies have agreements or expressions of interest for 30 GW of SMRs, primarily for data centers. Over 120 SMRs are under development globally.
At its investor update last week, GE Vernova’s (GEV) management talked about SMRs as a real potential value creator in the 2030s. GEV is currently building the first SMR in North America for Ontario Power Generation. Four of the GE Vernova Hitachi BWRX-300 units are being constructed at the Darlington site. Construction began this spring and is currently on schedule and on budget. Completion is targeted by the end of this decade.
Additionally, the Tennessee Valley Authority (TVA) was recently awarded a $400 million grant for TVA’s Clinch River project, which plans to use the BWRX-300. GEV also noted commercial momentum in Finland, Poland, and Sweden.
Nuclear as an Investment Opportunity
For investors, nuclear power could be an interesting portfolio addition, given a multi-year outlook for global growth. However, it may be difficult to determine how best to get nuclear exposure. The space is arguably broad and encompasses different risk profiles, from uranium miners to utilities to industrial companies.
The Range Nuclear Renaissance Index (NUKZX) provides diversified exposure to nuclear energy across four categories: construction and services, utilities, advanced reactors, and fuel. It has minimal exposure to uranium mining, which has historically been more volatile (read more). The index was designed by an experienced investor in the space with an intention to maximize risk-adjusted returns (read more). NUKZX is the underlying index for the Range Nuclear Renaissance Index ETF (NUKZ ).
For investors, the WEO reinforces the global growth trajectory for nuclear power. The tailwinds from global policy support and a realization that the world is going to need reliable, emission-free power continue to provide tailwinds for nuclear.
For more on the IEA’s report and the implications for oil and natural gas, check out this research note.
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Related Research:
Not All Nuclear Exposure Is Created Equally
Nuclear Expert Breaks Down Current Investment Case
IEA Report Highlights Tailwinds for U.S. Midstream
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