This change is driven by the urgent demands of the energy transition and the challenges in achieving sustainable energy goals. Nuclear energy is now being promoted as a key solution to balance high electricity demand growth and climate change.
What’s the science behind nuclear power?
Dr Leslie Dewan, nuclear engineer at MIT, puts it simply: “a nuclear power reactor is just a fancy way of boiling water”. Nuclear fuel typically contains uranium-235, a massive and slightly unstable atom.
Under the right conditions, its nucleus can absorb an extra neutron, growing for an instant and then separating into two smaller elements, releasing heat and three neutrons.
If, on average, at least one of these neutrons splits another uranium atom, the chain reaction continues, and the fuel is said to be in a critical state. Water is then pumped past the heat source and becomes steam, which then turns turbines to generate electricity.
Challenges facing nuclear power
Contrary to popular belief, the main obstacle for nuclear power isn’t safety but cost. Nuclear projects often exceed budgets and face long delays due to complex consenting processes and lengthy procurement times. This complexity makes nuclear an expensive option.
It must be acknowledged that nuclear energy has a chequered and controversial history due to incidents like Three Mile Island, Chernobyl, and Fukushima, which has resulted in fewer new reactors being constructed over the past 30 years and an acceleration in reactor shutdowns over the last 10 years, due largely to an ageing fleet.
The United States nuclear fleet’s average age is 42 years versus an original design life of 30-40 years.
So why has the nuclear conversation changed?
1. Electricity demand growth
Population growth that includes rapid urbanisation, together with the intensive electricity consumption expected from data centres and artificial intelligence, will not likely be met with renewable generation alone.
2. Low emission generation
As nuclear reactors do not produce carbon dioxide; nuclear energy is the second largest source of low emission power after hydro. That said, the upstream processes from mining and refining uranium to make reactor fuel does require large amounts of energy.
3. Small land footprint
To produce 1000 megawatts, a nuclear facility only needs 2.6 sq km to operate, while wind needs 360 times more land (for 430 wind turbines), and solar needs 75 times more land (for three million solar panels).
4. Produces minimal waste
Nuclear fuel is extremely energy dense. For example, all nuclear fuel waste produced by the US over the last 60 years could fit in a rugby field at a depth of less than 9m.
5. Meaningful baseload capacity
In the words of Bill Gates: “nuclear power is the only energy source we have that can deliver large amounts of power day and night, through every season, almost anywhere on earth”.
6. Energy security
Domestic nuclear generation would reduce reliance on fossil fuel imports which strengthens a country’s electricity network.
7. Government policy support:
- At the 28th annual United Nations climate meeting, a declaration was signed by 22 countries in 2023 to triple nuclear capacity generation by 2050.
- The US Inflation Reduction Act is beneficial for existing nuclear plants and new nuclear construction.
- China has shifted to a more positive nuclear policy with the emphasis on “proactive” development and energy security. Australia’s opposition leader Peter Dutton promised, if elected, to build seven nuclear plants along Australia’s coasts.
Who is exposed to more nuclear power
It is becoming clear there is not enough uranium being mined to satisfy the demand of the current global nuclear fleet (400 nuclear reactors), let alone the requirements of the largest global reactor building programme seen in decades (60 reactors under construction, with China, Russian and India representing 60% of the pipeline).
As such, the uranium price is expected to remain at structurally higher levels for the remainder of the decade.
Uranium mining is very concentrated with Kazakhstan, Canada, and Namibia representing 70% of global production. Australia has several listed companies exposed to uranium, including Paladin Energy and Boss Energy.
The renewed attractiveness of nuclear energy is prompting a re-evaluation of investment approaches across the broader energy landscape.
Global infrastructure investors are now joining technology investors in recognising the critical role of nuclear energy in providing reliable, low-emission baseload electricity with no direct carbon dioxide emissions.
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