I’ve been reading and thinking a lot about nuclear power recently. There are billions of people around the world who want a higher material quality of life. That correlates almost 100% with higher energy usage. In the US, we want to electrify everything, but don’t have the energy infrastructure to support all the EVs environmentalists are trying to force/encourage us to use. Companies like Google (Alphabet), Facebook (Meta), Amazon, OpenAI, and Twitter (X) all want to build massive AI datacenters. Each one of those planned buildings will use as much power as entire cities. We are so short on capacity that some of those companies are making deals with nuclear power companies like Talen Energy ($TLN) at prices well above current market rates. Imagine wanting reliable power so much that you offer to pay extra.
Building more natural gas and coal plants might be easier, but are not politically feasible. China is building more coal plants and leads the world in carbon emissions. (They’re also building a massive new nuclear fleet as well.) In the US and in Europe, concern about carbon emissions means this isn’t going to happen. Solar and wind aren’t reliable enough to power an entire city’s air conditioners in the summer let alone hospitals and datacenters. The answer is going to be nuclear.
The new small modular reactors (SMR) have a tiny footprint, are safe, do not meltdown, and some can go decades without refueling. You could put one in your driveway, but we don’t recommend that as your HOA would definitely object. They use a variety of fuels, but the most common is the uranium that is used in traditional large-scale reactors. The concern about nuclear waste was always overblown, but there’s new technology to store that small amount of waste safely.
I want to highlight an article by the Rational Optimist Society called The New Nuclear Capital of America. Stephen McBride gives an excellent overview of the coming benefits of widely-available and inexpensive new nuclear power. I highly recommend taking five minutes to read it. At a minimum, check out the chart on Electricity Consumption vs Income per Capita.
This is an investible thesis. I’ll be posting a portfolio update for DKI premium subscribers in a few minutes.
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