Over the past couple of years, the nuclear energy sector has enjoyed a renaissance in the U.S. and many Western countries thanks to the global energy crisis triggered by Russia’s war in Ukraine, high power demand and nuclear’s status as a low-carbon energy source. Uranium demand has soared thanks to a series of policy "U-turns" with governments from Japan to Germany revising plans to phase out nuclear power. Uranium spot prices hit an all-time high of $81.32 per pound in February, double the level 12 months prior. According to the World Nuclear Association, demand from reactors is expected to climb 28% by 2030, and nearly double by 2040. Not surprisingly, the sector’s popular benchmark, VanEck Uranium and Nuclear ETF (NYSEARCA:NLR), recently hit an all-time high.
However, nuclear energy stocks have lately lost momentum, mostly because the sector was seriously overheating. One of the biggest losers has been NuScale Power Corp.(NYSE:SMR), with the stock crashing nearly 30% in the current month. The selloff kicked off about three weeks ago after the company disclosed an agreement with several brokerage firms in which the company may offer and sell from time to time as much as $200M in common stock. NuScale says proceeds from the sale will be used for general corporate purposes, including operating expenses, capital expenditures, R&D costs and working capital.
NuScale is a developer of modular light-water reactor nuclear power plants. Small modular nuclear reactors (SMRs) are advanced nuclear reactors with power capacities that range from 50-300 MW(e) per unit, compared to 700+ MW(e) per unit for traditional nuclear power reactors. Back in October, we reported that NextEra Energy (NYSE:NEE) CEO John Ketchum revealed that he’s “not bullish” on small modular reactors (SMRs), adding that the company’s in-house SMR research unit has so far not drawn favorable conclusions about the technology.
“A lot of [SMR equipment manufacturers] are very strained financially,” he said. “There are only a handful that really have capitalization that could actually carry them through the next several years.”
However, investors who bought SMR stock a year ago are still sitting pretty after realizing a 634% return over the past 12 months.
Centrus Energy Corp. (NYSE:LEU) has lost 35% since the beginning of November. U.S. Nuclear Regulatory Commission (NRC) approved Centrus Energy’s request to make High Assay Low-Enriched Uranium (HALEU) at its enrichment facility in Piketon, Ohio, becoming the first company in the western world outside Russia to do so. A year later, the U.S. Department of Energy (DoE) announced a ~$150 million cost-shared award to American Centrifuge Operating, LLC, a subsidiary of Centrus Energy. HALEU is a nuclear fuel material enriched to a higher degree (between 5% and 20%) in the fissile isotope U-235. According to the World Nuclear Association, applications for HALEU are currently limited to research reactors and medical isotope production; however, HALEU will be needed for more than half of the SMRs currently in development. HALEU is only currently available from TENEX, a Rosatom subsidiary.
LEU stock is still up nearly 50% over the past 12 months.
Stocks of uranium miners have not been spared, either, with shares of Cameco Corp. (NYSE:CCJ), Uranium Energy Corp. (NYSE:UEC), NexGen Energy (NYSE:NXE) and Energy Fuels Inc. (NYSE:UUUU) down in double-digits over the past couple of weeks.
Sam Altman’s nuclear startup, Oklo Inc. (NYSE:OKLO), has lost 21% over the past month. Oklo develops fission power plants to provide reliable and commercial-scale energy to customers in the United States. Oklo went public in May completing its business combination with AltC Acquisition Corp. Oklo shares have gained 83% over the past 52 weeks.
Baltimore, Maryland-based Constellation Energy Corporation (NASDAQ:CEG) is a power utility that sells natural gas, energy-related products, and sustainable solutions. The company owns approximately 33,094 megawatts of generating capacity consisting of nuclear, wind, solar, natural gas, and hydroelectric assets. CEG stock is down 13% over the past two weeks but has returned 101% in 12 months.
That said, the long-term outlook for the nuclear sector remains bullish. Back in March, a total of 34 countries, including the U.S., pledged to use it to reduce reliance on fossil fuels. According to the International Energy Agency's (IEA) report Electricity 2024, nuclear power generation is forecast to reach an all-time high globally in 2025, exceeding the previous record set in 2021 as new reactors begin commercial operations in many markets, including China, India, South Korea, and Europe; output from France climbs and several plants in Japan are restarted.
By Alex Kimani for Oilprice.com
