Based on media reports, it appears that there is an increasing awareness that renewable energy alone isn’t going to fully meet demand for affordable and reliable electricity. Anecdotally, a bipartisan coalition of all six New England governors recently concluded that, in order to meet the region’s energy needs, a diverse strategy would have to include nuclear power.
Historically, regulatory barriers have limited the development of new nuclear capacity. That may be changing and public opinion is shifting. Policymakers are increasingly coming to realize that meeting climate goals without reliable baseload power is unrealistic. The conclusion isn’t that we should abandon renewables, it’s that they can’t stand alone.
As electricity demand rises, regions that can deliver reliable, affordable power will have a competitive advantage. Currently, nuclear power generation is the only low-emission, proven, and scalable source of base load electricity.
The experience of other countries offers real-world examples. For instance, France, where approximately 70% of its power is nuclear based, maintains low emissions while exporting energy to neighboring countries. By contrast, European systems that rely heavily on inherently intermittent renewables have faced higher costs and reliability challenges.
Investors should understand that it will be years, perhaps decades, for nuclear to become a more important part of the country’s electric generation capacity. Despite improving perceptions by politicians and the public, formidable roadblocks remain, including cost, permitting, regulation, and NIMBY (not in my back yard).
All comments and suggestions are welcome.
Walter J. Kirchberger, CFA
