A view of nuclear power from today’s investor perspective in The Motley Fool.
Regards, Jim Muckerheide
A Healthier Glow for Nuclear Power?
By Stephen D.
"It's pronounced nu-cu-lar." -- Homer Simpson
For decades now, any notion of expanding our national use of nuclear power has been dead on arrival. For those few souls intrepid enough to suggest a new plant, a blizzard of regulations, protests, and lawsuits often render the idea all but irrelevant. But that could be about to change.
The present administration is certainly more "nuclear friendly" than others in the past, and many operators seem willing to try to get new facilities approved. What's more, the power grid in many parts of this country is shaky, and new electrical capacity has to be added to replace aging facilities and keep up with growing power demands.
The brief case for
Unfortunately, all of these options have drawbacks.
Fossil fuel plants have two obvious problems -- pollution and reliance on finite sources of fuel. While progress is being made on the pollution side, recent price history with coal and natural gas highlights the potential threat of supply shortages. Hydroelectric power is an option only where geography permits, and there are growing environmental worries about the impact of dams on waterways. So, too, with wind power -- it's clean and effective, but not viable everywhere.
Nuclear power, then, appears to be a viable option today for expanding electrical capacity without simultaneously increasing our national reliance on hydrocarbons. With this in mind, let's now consider various aspects of this industry in greater depth.
Also, whether people acknowledge it or not, safety arguments always come down to relative risks -- what's acceptable and what isn't. Hundreds of people die in coal-mining accidents around the world on an annual basis, and it's virtually impossible to quantify the health risks of burning tons of hydrocarbons each year. Nuclear incidents can be horrible, but let's not pretend that the alternatives are risk-free.
Terrorism and theft are also valid concerns, but nuclear facilities are exceptionally secure -- protected with tons of concrete and steel -- and there are many other targets more vulnerable than a nuclear power plant. What's more, theft of nuclear waste is not as much of a security risk as alarmists believe, since nuclear power plants don't use weapons-grade material.
Like safety, pollution is a series of tradeoffs. Nuclear waste is highly toxic, but burning hydrocarbons releases more than 25 billion pounds of carbon dioxide into the atmosphere every year, to say nothing of sulfur, ammonia, and other pollutants. By comparison, an efficient nuclear reactor, where fuel rods are reprocessed, would produce about 1 cubic meter of waste. So what's your preference -- a smaller amount of isolatable pollution, or a much larger amount of diffuse, nearly invisible pollution?
The economics of
A study commissioned by TVO, a Finnish electric company, found that nuclear power is almost half as cheap as coal and about two-thirds the price of gas-fired plants. Of course, the numbers depend on assumptions like initial plant costs and anticipated regulatory costs, but you see the point: Nuclear power can be cheap.
Finally, uranium is still a
relatively plentiful resource in the world. What's more, much of the world's
uranium is in
Who stands to
What's more, there are literally dozens of publicly traded companies tied to the nuclear power industry, so what follows is only an initial sampling of what's out there:
That's not quite the case with BHP Billiton, though. Assuming that its acquisition of WMCResources closes as planned, BHP Billiton will hold almost 40% of the world's known uranium deposits. Uranium still appears to be just a piece of a much larger pie for the company, but investors looking for a uranium miner should definitely take a closer look at BHP Billiton.
Canadian company Cameco is not only the largest miner of uranium -- it's also a major converter and processor. In simple terms, Cameco takes uranium ore, concentrates it, and then refines and converts it into forms like uranium dioxide and uranium hexafluoride. The concentrates are then sold to utilities, which, in turn, contract with enrichers and fabricators to create the fuel pellets for their reactors.
USEC, once a
Not surprisingly, if it involves power, GE is involved. GE's nuclear business provides turbines, parts, software, and instrumentation for nuclear power plants. Along a similar line, McDermott offers generators, heat exchangers, and other plant parts for the industry.
Washington Group is a bit different -- it focuses on design, construction, maintenance, and support of nuclear energy facilities. Not only does Washington Group contract to build plants (more than 35,000 megawatts to date), but it also works with processing and waste facilities.
Exelon, Entergy, and Dominion are
among the largest operators of nuclear plants in
An avenue to fuel
On Earth, there is very little free hydrogen. Most of it is locked away in rocks, hydrocarbons, and water -- and it takes energy to get it out. The technology to liberate that hydrogen is readily available, but it requires electricity (about 50 kWh to liberate 1 kg of hydrogen from water). That electricity, in turn, requires a source, such as a hydrocarbon-burning power plant.
Consequently, burning hydrocarbons to produce electricity to produce free hydrogen to produce electricity doesn't necessarily cut pollution as much as advertised -- it simply moves it from onboard a vehicle to a power plant or reforming plant. With nuclear power, though, large amounts of hydrogen could be produced with comparatively less waste and pollution.
It's interesting to note that many
of the companies mentioned will benefit no matter what happens. If nuclear
power proves unacceptable, more coal will be mined, more gas will be pumped,
and more plants will still need to be built. And all but Cameco and USEC will
still have a role to play. One way or another, the
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).