2024 in Review: Energy

Note

Invest in nuclear power by focusing on existing nuclear site owners/operators, supply chain players like BWX Technology, and companies developing reactors. Energy demand is surging due to AI and data center needs, driving interest in small nuclear reactors and creating opportunities for investors. Big tech companies are investing in nuclear energy, exploring new reactor designs and securing capacity from existing nuclear plants to meet their energy needs. Renewable energy companies are facing challenges in addressing baseline power needs, with a growing realization that an all-of-the-above strategy is necessary to meet energy demands.

Highlights

• 2024-12-11 10:13 For me, I think there’s really three buckets you can look at to invest in nuclear power. It’s folks who own and operate existing nuclear sites. So think about these as the utility companies we talked about earlier. You can have folks who are playing the supply chain. So whether that’s, you know, folks like BWX technology who make fuel components, that sort of thing, or the uranium producers, which is an interesting segment of the market where there’s potential kind of crunch there, or you can look at folks who are developing reactors.

• 2024-12-10 16:26 So whether that’s, you know, folks like BWX technology who make fuel components, that sort of thing, or the uranium producers, which is an interesting segment of the market where there’s potential kind of crunch there, or you can look at folks who are developing reactors. And if it’s me, I’m really looking in those, those first two buckets. Folks that have operating businesses today that have been doing this for quite a long time.

• 2024-12-11 10:13 I’d say really that the big energy headline this year is that the headlines that dominate everything this year is AI and how is that related to energy at all? It’s really this is the year energy demand or expectations around electricity demand really went straight vertical. I think think a lot of folks don’t realize energy consumption in the US hasn’t really increased that much in the past 20 years, up about 5% since 2005. Now we’ve got energy consumption end user demand from AI expected to increase rapidly both from AI and other data center applications. Just training an AI model uses more energy than 100 households do in a year.

• 2024-12-10 16:29 Many of the top spots in the top five best performing stocks of the year. Three of them, Vistra, Constellation and GE Vernova.

• 2024-12-11 10:13 They’re building the BWRX 300 reactor which is, which is built by GE Hitachi, which is a subsidiary of GE Renovo, which you mentioned earlier. They’re already doing some of the pre construction work, building some of the components that will go into that and construction is going to start next year. The plan is for that plant to be operational in late 2028 or early 2029. So that just sneaks us under that three to five year timeline. Oklo has talked about having a commercial reactor available by 2027.

• 2024-12-10 16:49 You had Amazon make a deal with Talon Energy for $650 million to acquire nuclear energy from their existing plants. Microsoft, in the kind of existing plant bucket I mentioned earlier, made a deal with Constellation Energy to drop power from their existing plants, both reactivating the Three Mile island nuclear reactor, but also having a power matching agreement to power their data centers with nuclear power there.

• 2024-12-11 10:09 Folks that have operating businesses today that have been doing this for quite a long time. If I had to pick one company, BWX Technology still is the, I would say the highest quality nuclear business that I think is the lowest risk for folks to invest in today. You mentioned the military, nuclear sub and aircraft carrier business. They make fuel for those. They also manufacture the reactor components. They’ve been doing that for decades. It’s basically a monopoly business, makes up the majority of the revenue. They also are one of these companies building that Project Pele microreactor in the US generating revenue. They’re also working with DARPA and the Space Force on the first nuclear rocket engine in space with, with, with Project Draco. So they really have the flagship nuclear programs of the Navy, of the Air Force, slash Space Force and of the Army.

• 2024-12-11 10:09 he most notable of which I talked about that the BWRX 300 reactor that’s being built in Ontario at the Darlington site.

• 2024-12-11 10:09 They are building the reactor pressure vessel for that, for that reactor and are currently generating revenue on that today. So if you think about the kind of small reactor designs in North America that are getting built right now, BWX Technologies has shots on goal on both of those and also have the potential to offer business to lots of these other small reactor, small modular reactor design companies, they’re the only company that’s able to manufacture large nuclear reactor components. So I think they’re well positioned regardless of who wins in small modular reactors to really gobble up a portion of that business and then, you know, without spending too, too much time here they have a medical business that’s in a position to grow rapidly providing nuclear radioisotopes. OCLO is invested in there as well. So I think this is a business that a lot of companies are talking about doing things in these space micro reactor space.

• 2024-12-11 10:13 For example, the iShares Global Clean Energy ETF, it’s about flat over the past five years and has had a selling off basically since the pandemic hype. And many of these companies. It’s impossible right now, Nick, to talk about these companies without talking about the political situation

• 2024-12-11 10:13 First Solar, which is a company that makes solar panels and operates, we’ll call them, solar power plants. You can imagine the large fields of solar panels that are generating energy.

• 2024-12-10 17:03 So if I had to invest in the renewable area, I would be looking at some of these companies like Brookfield, renewable energy folks who own kind of a broad basket of renewable assets, and less in some of these companies that make panels and that sort of thing, which for solar would fall in that bucket.