“Nuclear could be on the way out for nations like Japan, Germany and even the US, but that just means there’s big money to be made ahead” —
Talk about an energy bully.
Ever since producers were able to successfully tap into an obscene amount of shale gas in our country…the other energy sectors have seen their slice of pie cut thinner – some more than others.
Perhaps the one industry that’s been impacted the most by the shale gas boom is coal.
In the US, King Coal historically dominated the energy space.
But as cheap natural gas floods the market, major consumers such as utilities are making the switch away from coal to run their energy-intensive operations.
As a result, fewer coal-fired plants are being proposed and capacity is shrinking. Currently in the US, there are only 36 plants in the works (this compares with 363 in China — but that’s a story for another day).
According to the US Energy Information Agency (EIA), by 2025 coal-fired generating capacity will fall below 2011 levels and will continue to decline through 2040 as older plants retire quicker than newer ones are built.
But coal isn’t the only industry in decline in America.
Nuclear power is also in a downward trend. In fact, on a global scale nuclear is taking an even bigger hit than coal is.
Unlike coal where there’s still tremendous growth in developing countries, nuclear demand is falling across the board, not just the US.
In a recent Bloomberg article, Germany and Japan are leading the way in terms of taking nuclear reactors offline, with 12 of 20 shutdowns worldwide since 2011.
The US has also done its share of closures with four.
And there may be more closures to come…
Germany intends to abandon nuclear power entirely while Japan is currently weighing its options.
Japan is on the fence due to the country having 50 reactors in its cache…so the idea of decommissioning all of them won’t be quick – or come cheap.
It’s estimated that taking 50 reactors offline would mean a $47 billion shortfall for Japan’s utilities.
But therein lies one of the juiciest money making opportunities that very few people realize…
Cashing in on Decommissioning
In 1986, a routine systems test failed at the Chernobyl Nuclear Power Plant. A power surge led to a massive reactor rupture and subsequent explosions.
The resulting fire casted a plume of highly radioactive fallout into the air, drifting across the former Soviet Union and parts of Europe.
It was the world’s worst nuclear disaster before Fukushima.
Immediately following the Chernobyl disaster, 20 nuclear reactors across the globe were turned off.
What’s interesting is that 27 years later, most of the plants that were shut down are still in the process of being decommissioned.
The cost and time to fully decommission a nuclear plant varies, but to get a sense of the scope of such an undertaking, it’s worth looking at the Sellafield nuclear facility in the UK.
The decommissioning program at Sellafield began in 2008, and some estimates predict that the program will take nearly 100 years to complete.
So far, the budget to decommission Sellafield’s seven reactors and fuel-processing stations has reached $106 billion. And price tags like that, this may be a good time to look at engineering firms or haz-mat disposal companies with exposure to nuclear reactors.
Global veterans like Westinghouse (subsidiary of Toshiba) are in talks with various governments around the world to help with decommissioning efforts.
Back at Sellafield, both AMEC plc (LSE:AMEC) and URS Corp. (NYSE:URS) have been given a 17-year extension option this year to continue their shutdown operations.
In the US, there are currently 17 nuclear reactors slated for decommissioning or are already in progress, according to the Nuclear Energy Institute.
The Nuclear Regulatory Commission (NRC) states that once an operating license for a closed reactor is terminated, decommissioning activities must be completed within 60 years.
With all the potential long-term contracts and billions of dollars up for grabs in the next few years, AMEC plc (LSE:AMEC) and URS Corp. (NYSE:URS) could be in a position to profit.
Folks, nuclear decommissioning is one of the best-kept secrets in the market. Finally nuclear investors have something to smile about.
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