Stock

: Some large buyers are backing nuclear energy, a possible savior of the power disaster that’s sweeping the world

Investors have turned to alternative energy sources such as solar, wind and geothermal energy that were once niche as governments crack down on polluting and toxic fossil fuels.

What is often avoided, however, is any discussion of a reliable, carbon-free source that can scale more than any other alternative form of energy: nuclear power.

Sustainably minded investors have a bad relationship with nuclear energy. Significant drawbacks abound: the high cost and length of time it takes to build facilities and manage spent fuel (nuclear waste), and the potential for proliferation.

Bill Gates, Warren Buffett

In a time of climatriage, however, nuclear energy is given a new face. The best-known example is Bill Gates' progressive nuclear reactor company TerraPower, which has partnered with GE-Hitachi Nuclear Energy and Berkshire Hathaway
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Energy company PacifiCorp to eventually build a small next-generation nuclear reactor using new fuel technology.

As the global economy struggles to rebound after last year's lockdowns, upheaval in traditional energy supplies, and the transition to renewables, proponents of nuclear energy could use this time to push it forward as a base load source of clean electricity that is in tune with wind and sun can work energy and as an alternative to CO2-emitting natural gas, which is often bundled with renewable energies.

Top-class summit

The use of nuclear energy to achieve the goals of the Paris Agreement is expected to be discussed at the UN climate conference, the so-called COP26 summit, which begins on October 31 in Scotland. In its report earlier this year, the Intergovernmental Panel on Climate Change said nuclear energy "has the potential for an expanded role as a cost-effective containment option" but can cause "big problems" if the drawbacks are not carefully addressed.

These “big problems” are the hurdles to nuclear power, but new nuclear technologies try to address some of these problems.

Smaller, safer reactors

Alex Gilbert, project manager at the Nuclear Innovation Alliance, which supports the commercialization of advanced nuclear power systems, says the new designs are a fraction of the size of a conventional nuclear power plant and use significantly less fuel.

Gates TerraPower's reactor would generate around 345 megawatts of thermal output. Microreactors, similar to the module that nuclear company X-energy is planning for the Ministry of Defense, are small enough to set up a semi-trailer, produce 10 megawatts (MW) or less, and are about the size of a wind turbine.

In comparison, Exelons is
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The recently newly licensed Braidwood Generating Station nuclear power plant in Illinois with two units generates 2,389 megawatts of electricity.

TerraPower and X-energy's projects are under an advanced reactor demonstration program, Gilbert says, and could potentially be online in 2029 or 2030. A third advanced NuScale reactor of approximately 250 MW could also be ready by this time. That would be three companies that produce electricity at the supply level.

But the first to hit the market could be an Oklo 4 MW microreactor. The US nuclear regulatory agency is now reviewing it. Because of its small size, if approved, it could be built and online as early as 2025, Gilbert says.

The new designs of advanced reactors could more easily operate with renewable energy on the grid, he says, noting that different systems have different strategies. TerraPower has an integrated molten salt storage system that can balance the power of the plant with the grid, while NuScale has multiple modules that can be switched on or off as required.

Gilbert says these advanced reactors use fuel more efficiently and consume much less of it. One of the fuel types discussed is low-enriched, high-grade uranium, which enables these new reactors to consume up to 20% of uranium 235, the isotope that creates energy during a chain reaction, and get more power. Conventional reactors only use 5%. This design makes spent fuel assemblies less radioactive than conventional reactors in the short and long term

"That means the amount of waste you volumetrically produce can potentially be much less," says Gilbert.

This type of uranium is used in Triso fuels which use some of the new designs. Triso contains a small amount of uranium that is surrounded by silicon and carbon based materials and acts as a containment itself. This coating also makes it extremely difficult to use in proliferation.

Another important difference is that many of the newer systems are designed to automatically shut down when human activity is required to ensure safety, which was one of the problems with Japan's Fukushima, which was down with its active systems .

Sustainability issues

Peter McNally, Global Sector Lead for Industrials Materials and Energy at Third Bridge, says nuclear power is out of the question for some environmental, social and governance (ESG) investors. However, he also points out that the turbulence in the fossil fuel markets is in itself a safety issue.

“Fuel source safety has become a key issue as energy and power crises have become global,” he says. “At this metric, Nuclear's track record over the past decade has been excellent. After all, nuclear energy competes with every available low-carbon and carbon-free source for its carbon content. "

Garvin Jabusch, chief investment officer of Green Alpha Advisors, whose firm manages sustainable portfolios, admits that sustainability investors are divided over nuclear energy and the need for decarbonization, adding that he is not entirely against nuclear energy.

“I think the existing nuclear reactors should let their lifespan run out, because they are there anyway,” he says, since they produce carbon-free energy.

"Dangerous to life"

However, he doesn't think it's a good idea to build new ones, even with advanced designs, and points to the common concerns about nuclear energy: spent fuel storage, proliferation potential, and cost.

“Sustainability is more than just greenhouse gas emissions. Let's not forget that these things use life-threatening fuel, ”he says.

There are some advanced nuclear reactors out there that want to use spent fuel in their designs, and Jarbusch says he'd be interested. "That would be a great way to both clean up the waste from existing inventory and get a lot of carbon-free energy," he says.

Regulations, financing

Regulatory updates can encourage ESG investors. Barclays says the EU Sustainable Activities Taxonomy, a classification system that Europeans are developing, “could provide more clarity about the role of nuclear energy in the green transition, which could help build greater consensus among investors who choose to are not yet sure about the nuclear sector from an ESG perspective. ”

David Yurman, a nuclear industry observer who blogs under Neutron Bytes, says the industry could use funding from ESG investors looking to support carbon-free energy, but he's not sure the industry is ready for those investors to consider is.

"The biggest concern these companies will have with ESG investors is reviewing the data they have collected for their ESG reports," he says. "Investors will say, 'How do I know your data is good?'"

Businesses also face a common stumbling block for small, private businesses: being able to do the extra due diligence required of many ESG investors, says Yurman.

“You are simply over the kettle to get the next round of financing, develop the product and cope with the regulatory burdens. ESG reporting just isn't getting the attention it likely needs, at least not now. But maybe in the future, ”he says.

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