The Current and Future Trends in Nuclear Energy

For decades, nuclear energy has been a contentious subject in the world of sustainable investing. Despite the fact that nuclear power produces no carbon emissions, issues with waste management, workplace safety, and high-profile accidents have resulted in significant opposition.

Over the previous ten years, nuclear power capacity has stayed constant. Despite an average worldwide energy growth rate of 2.5% per year between 2010 and 2021, according to the International Energy Agency, the supply of nuclear energy globally flatlined throughout this time. As a result, the energy source's share of overall power generation has decreased from 13% to roughly 10%.

But things are about to change, especially in emerging markets. Even the most cautious projection from the IEA (which assumes merely stated policies rather than a world with achieved net-zero emissions) forecasts nuclear power to grow at a compound rate of roughly 2% to 2030 as increased attention is paid to cutting carbon emissions in order to meet rising electricity demand.

The distribution of this growth, however, is unlikely to be uniform. According to the IEA, Asia will account for more than 90% of all newly built nuclear power capacity by 2030, with an average annual growth rate of 7%. China (estimated to expand by about 5% annually), India (anticipated to grow by about 13% annually), and Japan (expected to grow by about 14.5% annually) are likely to lead this surge, which is significantly greater than the 1.7% compound annual growth rate witnessed in the area over the previous ten years. In contrast, nuclear supply in the United States and Europe is most likely to remain stable or even slightly decline.

You should keep an eye on a few specific businesses to get exposure to the resurgence of the nuclear industry.

The largest publicly traded utilities are unlikely to take the lead on new development, particularly in the US, due to the difficulties in completing a large nuclear facility on schedule and under budget. However, emerging technologies are working to lower these up-front expenses by turning coal plants into nuclear ones (like Bill Gates' TerraPower venture) or constructing more compact, modular buildings. Even while our analysts do not anticipate this to be a near-term development, many solutions may eventually move from private markets to publicly traded corporations.

Another frequently discussed and intriguing but distant possibility is nuclear fusion. The solution generates no radioactive waste from current nuclear production and uses hydrogen, a plentiful fuel. Significant milestones have been reached in recent years, including the generation of more fusion energy than was invested. Even the most optimistic projections do not foresee economically viable fusion within the next ten years, suggesting that further developments could improve the economics of nuclear energy.