Research
Interview Synopsis

US nuclear power industry – Q4 2020 update & outlook

  • Multi Asset
  • Utilities
  • North America

Nuclear power has been declining in the US, propelled in part by safety concerns in the wake of various disasters, including Three Island Mile and Fukushima. Third Bridge Forum interviewed a former VP from NRG Energy Inc to chart where the industry is today and the various challenges it is facing.

Click on the hyperlink below to access the full Forum transcript.

What’s powering Nuclear’s decline?

First on the agenda was an overview of the main trends contributing towards the decline in nuclear energy. The specialist highlighted the fact that gas prices have plummeted: “Around 2008, gas was selling for about USD 14 per million Btus and now it’s around USD 2 or USD 3, and that price driver is the thing that’s caused the markets to tank.”

There is also a perception problem, not least for the aforementioned reason. According to the former VP, “nuclear is not getting credit for the clean generation that it provides and is not getting the financial incentives that it needs to compete against highly subsidised renewable sources.”

Other pertinent challenges for the industry include the issue of sourcing labour. Even though the standard wage for construction workers and operators is already high, “the issue is those people who are radiation specialists, the licensed operators, the people whose skillsets are very closely tied to nuclear are ageing.” How to deal with nuclear waste is another long-term obstacle, with the specialist highlighting the continued stalling in the Yucca Mountain Nuclear Waste Repository project.

Decommissioning methods and costs were also discussed, as well as the cost per unit and how trust funds are maintained. As a back-up option, nuclear units can also be taken offline by a process called Safstor, which leaves the site inert for up to 60 years. However, “that’s not a politically popular decision with the local populace, as you can imagine.” 

Uranium, which costs about USD 25-30 per pound, accounts for approximately 20% of operating costs. Major producers include Kazakhstan, which “has the old Soviet model of economics… so basically, at the end of every month, Kazakhstan sells every piece of uranium on the shelf.” On the other hand, Australia and Canada “[respond] to supply and demand, so I think the price of uranium is probably pretty stable.”  

To access all the human insights from Third Bridge Forum’s US Nuclear Power Industry – Q4 2020 Update & Outlook Interview, click here to view the full transcript.

The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.

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