A decade ago, the global nuclear power industry appeared to be in steady decline. Concerns over safety, commodity-linked supply pressures, and radioactive waste disposal had dimmed enthusiasm for a technology once seen as a revolutionary energy source.
However, recent developments suggest a potential revival, driven by investments from tech giants like Microsoft, Google, and Amazon, alongside mounting pressure on nations to reduce carbon emissions.
The Promise and Pitfalls of Nuclear Power
In the mid-20th century, nuclear energy was hailed as a near-limitless resource. A kilogram of uranium could produce 20,000 times the energy of coal, promising a future of abundant electricity. Yet disasters such as Chernobyl in 1986 and Fukushima in 2011 heightened public fears, leading many nations to scale back or abandon nuclear ambitions. From 2011 to 2020, the industry lost 48GW of global electricity generation capacity, according to the International Atomic Energy Agency (IAEA).
While countries like Germany phased out nuclear energy, others like China pursued expansion. China increased its reactors from 13 in 2011 to 55 today, with 23 more under construction. For Beijing, nuclear power remains essential to meeting its growing energy demands.
Renewed Interest in Nuclear Energy
The global energy landscape is evolving, with renewed interest in nuclear power driven by several factors:
- Climate Goals: Wealthy nations are under pressure to meet Paris Agreement targets, especially as 2024 is projected to be the warmest year on record.
- Energy Security: Events like Russia’s invasion of Ukraine have underscored the need for reliable energy sources.
- Policy Reversals: Countries like South Korea and France are expanding nuclear programs instead of phasing them out. The U.S. has pledged to triple its nuclear power output by 2050, a goal shared by 31 nations, including the UK and Japan.
The Role of Technology Giants
Tech companies are also fueling the nuclear revival. Microsoft recently signed a 20-year deal to restart Pennsylvania’s Three Mile Island power station, while Google and Amazon are investing in Small Modular Reactors (SMRs). SMRs offer a promising alternative to traditional reactors, being smaller, more cost-effective, and quicker to deploy.
Challenges of Traditional Nuclear Projects
Large-scale projects like the UK’s Hinkley Point C and the U.S.’s Plant Vogtle highlight the challenges of traditional nuclear power. Both projects have faced significant delays and cost overruns. These issues have made SMRs a more attractive option, as they use standardized designs and can be built closer to power demand centers.
A New Nuclear Age?
The future of nuclear power depends on overcoming these challenges. With governments and private companies increasingly embracing the technology, nuclear energy could play a crucial role in the transition to a low-carbon future.
The MVIS® Global Uranium & Nuclear Energy Index (MVNLR) tracks the performance of the largest and most liquid companies in the global uranium and nuclear energy industries. The index is up nearly 30% YTD, underscoring the market's recognition of nuclear energy’s potential as a key component in addressing energy security and environmental concerns.
Source: MarketVector. Data as of December 9, 2024.
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About the author:
Jesse Nacht is an Index Research Associate at MarketVector IndexesTM (“MarketVector”). His core responsibilities include assisting in index development and design. Having come from a trading background, Jesse holds a Series 57 Securities Trader License. He has a Master of Arts in International Economics and Finance from the International Business School at Brandeis University.
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