Between 2005 and 2025, electricity demand in the United States increased by 10%. Not 10% a year, 10% in total. But between 2025 and 2045, there’s going to be a step change in demand, with electricity demand projected to increase by 60%. That’s a very good backdrop for nuclear power, which provides reliable, baseload power that is “clean” because it doesn’t produce greenhouse gases.
There’s a nuclear renaissance on the way. However, it looks like the United States isn’t quite ready to participate yet. Here’s what you need to know and how you can play the growth of nuclear outside of the U.S. market.
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Where are new reactors getting built?
The problem for investors seeking to participate in a U.S. nuclear power renaissance is that it really isn’t taking place just yet. Sure, some companies with existing nuclear power assets are benefiting from surging electricity demand. For example, utilityConstellation Energy (NASDAQ: CEG) has inked deals with artificial intelligence data center owners and other companies that will keep nuclear reactors operating longer than planned, or allow for increased output from existing reactors. And Southern Company (NYSE: SO) recently completed construction of two new reactors, positioning it to provide decades of nuclear power to the market.
However, the real nuclear power story right now is taking shape outside of the U.S. market. Of the 77 nuclear reactors under construction worldwide, only three are being built in the broader “Americas”, according to nuclear fuel supplier Cameco (NYSE: CCJ). Asia is the real hub for the industry, with a total of 57 reactors being built (37 in China, eight in India, and 12 throughout the rest of the region).
Nuclear industry service providers could be the best approach
It will be difficult for most U.S. investors to invest in the Asian nuclear power boom. However, that doesn’t mean it is impossible; you just need to be a little creative. For example, Cameco is one of the most important suppliers of nuclear fuel worldwide. It also owns 50% of Westinghouse, a service provider to the nuclear power industry. Cameco should benefit from nuclear power growth, wherever it occurs. And that includes the opportunity to benefit from U.S. nuclear growth if, perhaps when, it occurs.
A less direct option is Brookfield Renewable (NYSE: BEP)(NYSE: BEPC). This company owns a globally diversified portfolio of clean energy assets, including hydroelectric, solar, wind, and storage. But it also owns a piece of Westinghouse. So it, too, should benefit, though less directly, from a global nuclear power renaissance. What’s notable about Brookfield Renewable is that the partnership share class offers an attractive yield of 5%, with the corporate share class coming in at 4.9%. That will likely interest dividend investors far more than Cameco’s miserly 0.2%.
New reactor technology is exciting, but still not being used
That said, the future of nuclear power could be small modular reactors (SMRs) like those being developed by Oklo (NYSE: OKLO) and NuScale Power (NYSE: SMR). There is a huge long-term opportunity if SMR technology gains traction, particularly in the U.S. market, where AI data centers could benefit from the availability of the nuclear technology. Only that hasn’t happened yet. Oklo, for example, recently received bad news when it was dropped from a PJM Interconnection study. That could delay Oklo’s development plans by 14 months or more, according to the company.
NuScale Power, meanwhile, has at least two potential customers lined up for its SMR technology. But neither one is at a point where a confirmed sale is on the table. So NuScale Power is still just a high-risk start-up that only the most aggressive growth investors should consider buying. And even after a deal is inked, it still needs to prove it can reliably manufacture its reactors.
Nuclear is happening, but you need to tread carefully
Nuclear power is definitely on the upswing globally. However, that really hasn’t led to a massive increase in opportunity in the United States. So you need to be careful how you invest. Large stock price swings in Constellation Energy, NuScale Power, and Oklo are evidence that investor emotions can get ahead of actual long-term opportunities on Wall Street. That said, industry suppliers such as Cameco and Brookfield Renewable might offer investors a good entry point, given their ability to serve the global nuclear industry right now and in the future.
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Reuben Gregg Brewer has positions in Brookfield Renewable Partners and Southern Company. The Motley Fool has positions in and recommends Cameco and Constellation Energy. The Motley Fool recommends Brookfield Renewable, Brookfield Renewable Partners, and NuScale Power. The Motley Fool has a disclosure policy.
