European Alliance Calls On EU To Reconsider Nuclear Power Policies

The European Nuclear Alliance has called upon the European Commission to consider nuclear energy as "essential contributors" to decarbonization pathways in Europe.

"We strongly encourage the upcoming college of Commissioners to deliver a paradigm shift in our energy policy," the alliance said at the Energy Council meeting held in Luxembourg on October 15. The commission should recognize the role of nuclear energy, alongside renewables, "for the future of our integrated energy system," it added. 

The alliance comprises 12 members, including Bulgaria, Croatia, Czech Republic, Finland, France, Hungary, Netherlands, Poland, Romania, Slovakia, Slovenia, and Sweden.

However, some experts have argued for a faster deployment of cleaner alternatives. They cite the environmental risks associated with nuclear energy and the disposing of reactor waste.

European Union (EU) states, like Germany and Spain, have pushed to keep nuclear out of EU renewable energy goals. They have warned that taking into account low-carbon energy would slow down the deployment of renewables.

"Without such energies, there is no path for the EU to provide to its citizens affordable, reliable and abundant low-carbon energy," the alliance said.

The EU must also compete against a U.S. and China. The world’s two biggest economies plan to construct several new conventional and small modular reactors. 

Source: World Nuclear Association, Reactors Under Construction by Region (1950-2030)

Nuclear Power Could Satisfy Demand For AI, Data Centers

With demand from data centers and artificial intelligence (AI) increasing the need for electricity generation, big tech is jumping into the nuclear option. 

US-based tech giants Amazon AMZN and Google GOOGL announced their investment in small modular reactors (SMR) on October 16. Amazon's cloud computing subsidiary, AWS, committed more than $500 million in a partnership with Virginia's utility company, Dominion Energy D.

Last month, Constellation Energy CEG announced plans to reopen the Three Mile Island nuclear power plant under a 20-year agreement with Microsoft MSFT. The tech giant aims to supply its data centers with carbon-free energy. 

The Pennsylvania plant was the site of the U.S.' worst commercial nuclear power accident in 1979, with a partial meltdown that destroyed one of two reactors.

Biden Administration Pushes For Nuclear Power

The Constellation-Microsoft agreement comes amid a push by the Biden administration to reconsider using nuclear power to limit greenhouse gas emissions from the power sector. In 2023 alone, nuclear plants generated 2602 TWh of electricity, with around a third, 772.2 TWh, attributed to the U.S.

The push for nuclear is having a positive impact on ETFs and companies operating in this emerging space. 

The VanEck Uranium and Nuclear ETF NLR, which comprises miners, industrial companies that make reactor components and industrial exposure to nuclear, has returned approximately 20% in the last month. Oklo OKLO, Sam Altman's start-up, has surged around 240% in the same period. 

Source: Benzinga, Oklo Stock Price (30-day)

European Investments In Nuclear Power

Following Russia's invasion of Ukraine in 2022, Europe's need to invest in nuclear energy has accelerated, according to a survey published in December 2022. The Flash Eurobarometer 514 survey showed that 58% of EU respondents believed member states should invest in nuclear. 

As the demand for low-carbon energy surges, Europe is investing heavily in nuclear energy. However, the UK and France are in the lead. 

The UK announced a "major acceleration of homegrown power" to "boost long-term energy independence, security and prosperity." In the UK, reactors generate about 15% of electricity at 6.5 GW. The government plans to increase this usage to 25% or up to 24GW by 2050.

In France, 70% of electricity already comes from nuclear energy. In 2023, the French government abandoned plans to reduce nuclear energy. It instead is focusing on building six new reactors. 

Nuclear Power Plants in France, Source: World Nuclear Association 

Hungary, the Czech Republic, and Poland are also investing in new nuclear projects.

Nuclear Power Investment Uncertainty

The EU's plans to dramatically increase nuclear power could face financing challenges. 

Finance Watch about a substantial funding gap. It pointed to high levels of EU debt, fiscal constraints, and uncertainties surrounding the future structure of the electricity market. 

EU Climate-Financing Gap, Source: Bloomberg 

With the funding gap, the EU nuclear industry could only meet its target of increasing energy capacity by 50%. Nuclear energy accounts for almost one-quarter of the electricity produced in the EU and 50% of the low-carbon electricity.

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