All signals point to major growth

13 February 2024

With rising concerns about energy security, climate change, and developments in new technology, the outlook for nuclear energy is more promising than it has been in years and the price of uranium, seen as a bellwether for the nuclear sector, is up more than 60% since the beginning of 2023.

Nuclear energy just earned a new vote of confidence: The US led a group of 22 countries at the COP28 climate summit to support a push to triple to the amount of global nuclear energy capacity by 2050. And this is just the latest in a series of announcements pointing to major growth and improving prospects in the nuclear energy sector. With rising concerns about energy security, climate change, and developments in new technology, the outlook for nuclear energy is more promising than it has been in years.

In September the UN International Atomic Energy Agency revised upward its growth outlook for nuclear energy worldwide for the third year in a row, projecting more than doubling of capacity by mid-century. This mirrors a similar outlook issued by the International Energy Agency earlier this year.

These moves reflect two huge drivers. First, if nations are to reduce emissions, they need to look beyond electricity production, which only represents 20% of global energy consumption. Heating, industry, and transport are all massive users of fossil fuels, and these sectors need to play a part. Yet doing so often means electrification. Hence the amount of electricity we need may double or triple by 2050. Second, electricity needs to come from carbon-free sources. These will include renewables, but also vast amounts of nuclear-generated electricity, a scalable technology that delivers secure 24/7 power without emissions.

Meanwhile the price of uranium, seen as a bellwether for the nuclear sector, is up more than 60% since the beginning of 2023. No wonder that leading uranium producers such as Cameco have revised their outlook and have resumed some idled production.

Aside from reducing emissions, the war in Ukraine sparked a surge in interest in nuclear energy given greater need for energy security. Countries, especially in Europe, looked to reduce their dependence on Russian fossil fuels. In addition, the hostilities contributed to a spike in gas prices and sent countries around the world looking for other options. Because several years of nuclear fuel can be stored on site, nuclear plants are less vulnerable to supply disruptions.

The US government is bullish on nuclear energy but recognises that the domestic supply chain needs to be reinvigorated to support the growing market. Notably, as part of its nuclear energy strategy, it started the Advanced Reactor Development Program, designed to support demonstrations of several advanced designs. But you need fuel for the new and existing designs too, so the Administration has proposed more than $2bn to rebuild the nuclear fuel cycle, including uranium enrichment and HALEU production. Centrus Energy is playing a leading role in this and has just delivered its first HALEU produced from its Piketon, Ohio plant.

The US is not alone in strengthening its domestic nuclear energy resources. France is moving forward with six new EPR reactors, developing a new SMR design. Orano has announced a $1.8bn investment to boost uranium enrichment capacity by over 30% by 2028, not an investment they would make without the right market signals. The World Nuclear Exhibition which took place in November in Paris saw record attendance with companies announcing a host of new projects.

The UK is also pushing ahead with new large-scale nuclear, as well as taking steps to bring to market small modular reactors, as well as other advanced designs. Poland has agreed to build three new Westinghouse AP1000 nuclear reactors. Meanwhile, Romania is considering smaller plants, including ones from NuScale Power. Sweden recently announced a national roadmap for nuclear, with plans for two new large nuclear plants by 2035 and up to 10 large reactors by 2045.

In addition, advances in nuclear energy technology have attracted interest by other countries seeking carbon reductions and energy security. Smaller, more affordable designs are driving this trend, bringing financing within reach to countries previously shut out of the market.

Recent challenges faced by SMR developers can be expected even amid a healthy market outlook. Rising interest rates are posing challenges for all capital-intensive industries, which comprise all clean energy sectors.

Think tank Third Way estimates there are some 75 nuclear technology developers in North America working on innovative nuclear technology solutions. The global picture includes many more. Not every one of them is guaranteed to succeed, but given the positive outlook, the ones that do stand to reap huge rewards. And the large field means that the right combination of advanced design and technology will be out there somewhere for any potential application.

Whether companies are developing small or large reactors, fuel or services, the prospects for nuclear now are better than ever.

Author: Todd Abrajano, president and CEO of the US Nuclear Industry Council

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