Nuclear energy stocks are shares in companies involved in the lifecycle of nuclear power. They include businesses mining uranium – the primary fuel used in nuclear reactors – which are highly impacted by commodity pricing. The sector also encompasses reactor manufacturers, who undertake some of the most complex engineering in the world, and nuclear power plant operators, who generate consistent revenue by selling energy but face high levels of regulation and operational costs.
The sector is perhaps divisive from an environmental, social, and governance (ESG) perspective. While nuclear energy is considered crucial for achieving a net-zero world due to its ability to provide a steady energy supply with minimal greenhouse gas emissions, the radioactive waste it produces can last for millions of years. Disasters like Chernobyl and Fukushima have contributed to public distrust, despite advancements in safety.
Advantages and drawbacks of nuclear energy stocks
Consistent and reliable source of energy
On the plus side, nuclear power provides a consistent and reliable source of energy, making it a reasonable complement to renewable sources like wind and solar. This can also make the sector attractive to income investors.
Despite the associated radioactive waste, nuclear energy produces significantly fewer greenhouse gas emissions compared to fossil fuels like oil, coal or gas.
The sector is also increasingly seeing better government support, especially as hydrocarbons are expected to run low over the next few decades. This all makes for a high growth sector – which also means increased technological advancements – for example, in small modular nuclear reactors.
High costs and long timelines
Constructing a uranium mine or a nuclear power plant is usually very expensive, and very time-consuming. Construction can cost billions of dollars, and it often takes over a decade to go from first spade to operational. This can represent a significant risk, especially as uranium prices and government policies fluctuate. Investors are often also wary of the costs associated with decommissioning mines or plants, especially as they come closer to the end of their useful life.
Safety and public perception challenges
Particularly regarding the disposal of nuclear waste, which remains hazardous for thousands of years. An entire branch of symbolism, known as nuclear semiotics, is dedicated to creating long-term warning messages to deter human intrusion at nuclear waste repositories.
Overall though, all energy sources have their own negatives, and nuclear appears to sport fewer downsides than most.