Investing.com – UBS takes a look at nuclear power, seeing the possibility of a renaissance in the industry.
“For decades, nuclear energy was considered problematic by investors, regulators, utility companies, and others through the value chain. We think that has largely reversed,” said analysts at UBS, in a note.
Nuclear is now being posited as “the” solution to the interconnected issues of high electricity demand growth and climate change, added UBS, where future forecast electricity demand growth (plus, ideally, replacing existing fossil fuel generation) could optimally be delivered with low carbon solutions.
Energy security, in replacing the need for fossil fuel imports, is also a consideration (though with material geopolitical risks in the uranium supply chain).
Alongside COP28, the announcement of “a global aspirational goal of tripling nuclear energy capacity by 2050” to us was important (though for the moment, symbolic).
Nuclear is a proven low-carbon power source and can deliver large amounts of baseload power: 1GW of nuclear provides significantly more electricity output than 1GW of installed capacity from any other source, UBS noted, while renewables are intermittent, require grid investment/adjustment, have lower load factors and typically require more land.
The Swiss bank sees two theoretical catalysts to significantly accelerate nuclear capacity rollout – sizeable, coordinated government backstop and support, along the lines of what we are currently seeing in China; and possibly in combination with the above, AI/data center buildouts.
The bank sees the possibility for nuclear capacity additions in a range of c.58-86 GW new nuclear capacity by 2030, with more than half of the additions coming from China. For perspective, the entire operational nuclear fleet of France is currently c.61 GW.
In terms terms of companies with potential upside on nuclear we highlight: CGN Power (SZ:003816), CNNP, Constellation Energy (NASDAQ:CEG), Korea Electric Power (NYSE:KEP), IMI (LON:IMI), Schneider Electric (EPA:SCHN), Nuscale Power (NYSE:SMR), Fluor (NYSE:FLR), BHP Group (NYSE:BHP), Spie (EPA:SPIE), Rolls-Royce (OTC:RYCEY) and Centrica (OTC:CPYYY).