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Nuclear Power Is Making a Comeback in the Stock Market and HollywoodNuclear Power Is Making a Comeback in the Stock Market and Hollywood Salzman, Avi. Barron's (Online); New York Nuclear energy is getting some positive attention—including in a new movie by Oliver Stone that screened at Davos—and some of the stocks in the industry have been on the upswing. The role of nuclear energy in the energy transition could grow over time, and some countries already appear to be embracing the technology as they look to reduce carbon emissions. Shares of uranium producer Cameco (ticker: CCJ) have jumped 15% in the past month. Centrus Energy stock (LEU), which supplies nuclear fuel to utilities, is up 9.4%. Shares of Nuscale Power (SMR), which builds small nuclear reactors, have risen 4%. BHP Group (BHP), a miner that produces uranium, has surged 12%. Several of the nuclear stocks trade based on uranium prices, which have been relatively strong in the past month. But other factors play a role, too. Improving sentiment about the industry could point to gains in the future. Filmmaker Oliver Stone showed his documentary Nuclear at the World Economic Forum in Davos this week. In interviews there, Stone argued that nuclear power could be a key solution to the climate crisis and criticized some people in the environmental movement for their opposition to it. Reports from Switzerland say the screening there was packed. A bigger factor for the stocks in the near-term is government policy. Some countries are getting more positive about nuclear. South Korea said last week that nuclear energy is likely to account for 32% of its power production by 2030, up from prior expectations of 24%. Renewables are now expected to account for 22%, down from 30%. The shift is related to a plan that the new South Korean president had pushed during his campaign. China is also betting big on nuclear, and should have the largest fleet of reactors in the world by 2030, according to a recent paper from the Oxford Institute for Energy Studies . In the U.S., nuclear power is also getting support, but it comes as the industry is in the midst of a longer-term decline. Nuclear power accounts for about 19% of total U.S. electricity production, a level that hasn't changed much in the past decade. Most plants were built between 1970 and 1990 and six have closed since the end of 2017, with three more expected to go out of operation by 2025. That said, nuclear plants received grants and subsidies in President Joe Biden's infrastructure bill and in the Inflation Reduction Act. Much of the support is going toward keeping existing plants online, making sure they don't close for economic reasons. The government is also subsidizing projects that will boost smaller nuclear reactors, which could play a growing—and more flexible—role in power production. One of those projects is being built by TerraPower , a company founded by Bill Gates. TerraPower is building a nuclear plant in Wyoming that's expected to replace a coal plant by 2028. Two new nuclear generation units are also expected to come on line in Georgia by the end of 2023, the first new units in the country since 2016. Several U.S. utility companies use nuclear power, including Exelon (EXC) and NextEra Energy (NEE). There has been a robust debate about nuclear energy's role in the energy transition. It can serve as a stable low-carbon source of baseload power without some of the intermittency problems of solar and wind—when the sun doesn't shine or the wind doesn't blow they don't produce energy. But it comes with its own set of controversies as well. Nuclear disasters like the one at Fukushima in Japan in 2011 have soured some people on the technology, and others are concerned about how to dispose of nuclear waste. During Europe's energy crisis last year, Germany and other countries received criticism for phasing out too much of their nuclear power, because it could have been valuable when natural-gas prices were soaring. That said, France's large nuclear power industry—accounting for about 70% of electricity production—underperformed during the crisis, in part because of long maintenance outages. Arguably, one of France's problems is that its fleet of nuclear plants is too old and needs to be updated. It will take years to determine whether nuclear generation will play a growing or shrinking role in power production, in part because large-scale plants take more than five years to build. But it's good news for the industry that governments are spending money to keep older plants on line longer. If some of the new technology being tested today gains traction, nuclear could once again become a growing source of power. |
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