The planning process of building new nuclear power plants is lengthy and drives up costs. That’s one of the primary reasons so few get built in the US. The conservatism of nuclear regulators also slowed down the rollout of new technologies. That is now changing, which is why I am recommending Centrus Energy (LEU), notes Eoin Treacy, editor of Fuller Treacy Money.
People tend to get emotional about nuclear energy. Those who worry about it point to the long-term issue of nuclear waste storage. The small number of high-profile accidents also continue to make headlines.
Germany’s politicians closed all their nuclear power plants in response to the Fukushima accident in Japan. That was despite the fact Germany is not in an active seismic area.
But those who are in favor of nuclear energy point to its long-term reliability as a provider of base load power. That means it can be dialed up and down at will to meet demand. That’s not possible with intermittent supply like wind and solar. They need alternative backups to smooth out the delivery of electricity.
In December 2023, China put the first Generation IV nuclear reactor into service. On the same day, the US regulator granted permission for the first new design of a reactor since the 1970s. The defining characteristic of Generation IV reactors is they cannot melt down.
They are also easier to construct. In fact, they are built in factories and trucked to their destination. The reactors in use today all must constructed in place because they are so large.
These new kinds of reactors use higher concentrations of uranium. They need new kinds of fuel. As a result, the market for high assay low enriched uranium (HALEU) fuel is set to boom over the next decade.
At present, Russia supplies 24% of all the nuclear fuel used by the US. A bill is currently moving through Congress which would ban imports of fuel. We need to find new suppliers.
Centrus opened a new HALEU manufacturing plant in Ohio. It made its first delivery to the Department of Defense in November 2023.
The shares hit an initial peak in late 2021 and were recently ranging below $60. The shares are on the cusp of breaking out to the upside. Enthusiasm around the new enrichment plant and the potential for new demand are driving the move.
Nuclear fuel has been dependent on global cooperation since the end of the Cold War. That era is now over. Rising geopolitical tensions mean we need a new independent fuel cycle. Centrus is at the center of that trend.
