We'll see what the Barron's 'cover effect' has on CCJ, KAP.L and the rest of the uranium gang on Monday.
From Barron's, September 6:
Artificial intelligence and electric vehicles are devouring enormous amounts of electricity. Constellation Energy and Vistra could benefit.
Just south of Harrisburg, Pa., on a narrow island in the Susquehanna River, something extraordinary is taking place. The Three Mile Island nuclear plant, scene of a historic radioactive meltdown in 1979, is quietly getting prepped for a second chance. Within three or four years, the plant’s one undamaged reactor may start up again, heralding a new era in American energy.
“It would be incredibly symbolic,” says Joe Dominguez, CEO of Baltimore-based Constellation Energy , which owns the Three Mile Island reactor. The 1979 accident taught the industry “hard lessons” about how to make nuclear power safer. Now, Dominguez says, it can “also be the birthplace for this renewed interest in nuclear power.”
The stars are aligning for a nuclear power revival in the U.S. The government is funneling billions of dollars into the industry, tech luminaries like Bill Gates and OpenAI’s Sam Altman are backing new companies, and public support for nuclear power is firmly on the rise.
One sign of the industry’s rebound is Constellation’s stock price. The nation’s largest owner of nuclear power plants was begging state regulators for bailouts just a few years ago; now it’s thriving, and its stock is up 70% in the past year. There’s reason to believe that shares of Constellation and peers like Texas-based power producer Vistra will keep rising as government support increases and utilities boost payments to nuclear plant owners. Other publicly traded nuclear players, such as Canadian mining and nuclear-tech company Cameco , could also benefit as demand for uranium rises.
The rebound has come just as the nuclear age looked to be in its twilight. America’s 94 nuclear reactors generate 18.6% of U.S. electricity, enough to power 72 million homes. They’re the largest single source of carbon-free energy in the country. But nuclear’s share of total electricity generation has been ebbing for years, after peaking above 20% in the 1990s. A dozen U.S. reactors shut down from 2012 to 2021.
Subscribe to Barron’s Energy Insider
Our new, weekly, premium newsletter combines the unrivaled analysis and commentary of Barron’s editors with the exclusive data, insights, and real-time energy pricing of OPIS. Barron’s Energy Insider is a valuable resource for investors seeking to capitalize on opportunities, manage risks, and stay informed about developments in this crucial sector of the global economy. Subscribe here.The tide is turning. Six reactors slated to close from 2021 to 2025 have been saved through state and federal action. And three reactors that were closed and decommissioned may be restarted, which has never happened before. Gates’ nuclear company, TerraPower, is preparing the site of a retired coal plant in Wyoming for a new reactor with more than $2 billion in government financing, and two Altman-backed companies are testing nuclear technologies. The Biden administration has announced a goal to triple the nation’s nuclear capacity by 2050.
The biggest reason for nuclear power’s resurgence is that U.S. electricity demand is growing after more than a decade of flat power consumption. In some areas, demand is exploding. Electric vehicles, data centers powering artificial intelligence, and new factories fueling a “Made in the U.S.A.” industrial boom all need enormous amounts of electricity. Utilities are scrambling to secure reliable power, and they’re willing to pay up for it. The electric grid operator covering the mid-Atlantic and Midwest agreed in July to boost capacity payments to power plant owners ninefold, a multibillion-dollar windfall....
....Sizing Up the Winners
“It has been a fascinating time, probably the best supply/demand fundamentals I’ve seen in 40 years in this business,” says Cameco CEO Tim Gitzel. Cameco is now reopening uranium mines it shut after the Fukushima disaster. The company’s stock has risen with uranium prices. Analysts see earnings roughly doubling next year. That scorching growth rate isn’t fully reflected in shares, which trade at 29 times their estimates.The other big winners in the nuclear revival are owners of existing reactors; they’re poised to benefit from rising power prices....
....MUCH MORE
Constellation Energy provided one of the best-ever insights into the riverboat gambler/king of all he surveys/master of his domain side of Warren Buffet. We'll retell that story next week.
