This Top Energy Stock Sees Limitations for a Nuclear Energy Resurgence
Sunday, Oct 27, 2024 5:15 am ET
2min read Nuclear energy, once a staple in power generation, has faced challenges in recent decades. Despite these obstacles, the sector has seen renewed interest due to its potential in meeting growing power demand. NextEra Energy, a leading producer of all forms of power, including nuclear, has a unique perspective on the future of nuclear energy.
As a leading player in the energy industry, NextEra Energy believes that the U.S. power industry is entering a period of unprecedented growth in power demand. This growth is driven by various factors, including the increasing demand from data centers. Data centers alone are expected to add approximately 460 terawatt hours of new electricity demand at a compound annual growth rate of 22% from 2023 to 2030. This surge in demand necessitates the construction of additional power-generating capacity.
Nuclear energy, with its baseload and emissions-free nature, is ideally suited to meet this new demand. However, NextEra Energy acknowledges that there are practical limitations to nuclear energy's role in meeting this growing power demand. The company's CEO, John Ketchum, noted on a third-quarter conference call that there are only a few nuclear plants that can be recommissioned in an economic way. Even with a 100% success rate on those recommissionings, they would still only meet less than 1% of the expected 900 gigawatts of new power capacity needed by 2040.
Existing merchant nuclear generation is also limited in its ability to meet the new demand. There are only approximately 20 merchant nuclear plants in the country, and they are not evenly spread across the U.S. Furthermore, these plants are already serving existing demand, and even if they are contracted by specific customers, new resources need to be built to meet new demand.
Building new nuclear capacity to meet the additional power demand is also a challenge. Alternatives such as new utility-scale nuclear and small modular reactors (SMRs) are unproven, expensive, and not expected to be commercially viable at scale until the latter part of the next decade. While they could be an option in the next decade, nuclear energy would need to be price competitive with other sources, such as wind and solar, plus storage, which is growing cheaper as it scales.
Given these practical limitations, NextEra Energy does not believe that nuclear energy will play a major role in supporting the country's growing power demand. Instead, the company is much more optimistic about the future of renewable energy. Forecasts project a tripling in renewables growth over the next seven years compared to what was seen over the prior seven. With its scale and experience in the sector, NextEra Energy is well-positioned to capitalize on this demand growth.
In conclusion, while nuclear energy has the potential to play a role in meeting growing power demand, NextEra Energy sees practical limitations that may hinder its widespread adoption. The company is more optimistic about the future of renewable energy, given its projected growth and the company's expertise in the sector. As a leader in renewable energy, NextEra Energy expects to deliver robust growth in the coming years, making it a great stock to buy to capitalize on the country's surging power demand.
As a leading player in the energy industry, NextEra Energy believes that the U.S. power industry is entering a period of unprecedented growth in power demand. This growth is driven by various factors, including the increasing demand from data centers. Data centers alone are expected to add approximately 460 terawatt hours of new electricity demand at a compound annual growth rate of 22% from 2023 to 2030. This surge in demand necessitates the construction of additional power-generating capacity.
Nuclear energy, with its baseload and emissions-free nature, is ideally suited to meet this new demand. However, NextEra Energy acknowledges that there are practical limitations to nuclear energy's role in meeting this growing power demand. The company's CEO, John Ketchum, noted on a third-quarter conference call that there are only a few nuclear plants that can be recommissioned in an economic way. Even with a 100% success rate on those recommissionings, they would still only meet less than 1% of the expected 900 gigawatts of new power capacity needed by 2040.
Existing merchant nuclear generation is also limited in its ability to meet the new demand. There are only approximately 20 merchant nuclear plants in the country, and they are not evenly spread across the U.S. Furthermore, these plants are already serving existing demand, and even if they are contracted by specific customers, new resources need to be built to meet new demand.
Building new nuclear capacity to meet the additional power demand is also a challenge. Alternatives such as new utility-scale nuclear and small modular reactors (SMRs) are unproven, expensive, and not expected to be commercially viable at scale until the latter part of the next decade. While they could be an option in the next decade, nuclear energy would need to be price competitive with other sources, such as wind and solar, plus storage, which is growing cheaper as it scales.
Given these practical limitations, NextEra Energy does not believe that nuclear energy will play a major role in supporting the country's growing power demand. Instead, the company is much more optimistic about the future of renewable energy. Forecasts project a tripling in renewables growth over the next seven years compared to what was seen over the prior seven. With its scale and experience in the sector, NextEra Energy is well-positioned to capitalize on this demand growth.
In conclusion, while nuclear energy has the potential to play a role in meeting growing power demand, NextEra Energy sees practical limitations that may hinder its widespread adoption. The company is more optimistic about the future of renewable energy, given its projected growth and the company's expertise in the sector. As a leader in renewable energy, NextEra Energy expects to deliver robust growth in the coming years, making it a great stock to buy to capitalize on the country's surging power demand.
Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.
_7269a92e1747748160181.jpeg)
