Germany Cries “Uncle” And Opens The Nuclear Floodgates

Porter and Company's Photo
by Porter and Company
Saturday, Oct 22, 2022 - 14:47

For decades, opposition to nuclear power was as German as sauerkraut and Oktoberfest and selective historical forgetfulness. “Nuclear power, no thank you” was a catchphrase for entire generations of post-war Germans.

A survey in 1989 found that just 3% of Germans believed that new nuclear power plants should be built in the country. And in 2011, then-Chancellor Angela Merkel – in what in hindsight was a catastrophically bad judgment – decided to phase out nuclear power altogether.

But times have changed – thanks in part to the small matter of Russia, which before Russia invaded Ukraine supplied Germany with 55% of its natural gas, no longer being a source of energy inputs.

So it’s not a shock that earlier this year, a similar survey found that rounding error of pro-nukes has increased to 41%.

And earlier this week – in a flip-flop that makes those things you wear at the beach seem as solid as Doc Martins by comparison – German Chancellor Olaf Scholz laid the groundwork to keep Germany’s three remaining nuclear plants, which were slated to go offline at the end of the year, until April 2023 to try to fend off a possible energy crunch.  

Here in America, nuclear is back on the upswing too. On October 14, the new Plant Vogtle reactor in Georgia finally started to load fuel – ending a years-long limbo that’s been exacerbated by shutdowns, licensing delays, and supply chain backups.

Nuclear plants still generate the majority of America’s zero-carbon power, although the number of working reactors has been steadily declining.

Nuclear power is often dismissed as the red-headed stepchild of clean energy – though it emits as little carbon as wind energy, the gold standard of emissions for the tree-hugging crowd. And unlike wind, and solar – which deliver energy only when it’s windy or sunny – nuclear energy is reliable, as measured by its capacity factor.

Nuclear plants produce maximum power over 90% of the time – while, down there at the bottom, solar plants are reliably online less than 25% of the time.

Faced with an unprecedented energy crisis, governments in the West are rethinking their long-held positions on the role of nuclear power generation, setting the stage for what could be the biggest energy source “comeback story” of recent times.

If the “Nein, danke!” Germans can about-face, the door is wide open for the rest of the world to adopt nuclear power. Add in rising popular demand for “ESG”, and it’s a perfect nuclear storm.

And Germany is just the side dish, compared to the main dish of Japan and China. Post-Fukushima, Japan is re-discovering that its menu of energy options is as short as a late-night candle. And China’s voracious appetite for energy is pushing it to explore all options – with nuclear prominent.

Meanwhile, back at the ranch… production of uranium, the key input of nuclear power, is down sharply – setting the stage for a multi-year rally in the element.  This production chart says it all:

One way to invest in the future of nuclear power is the Global X Uranium Fund (NYSE: URA). In one investment, it offers exposure to 50 of the largest uranium producers, and others that work in extraction, refining, exploration, or manufacturing of equipment for the nuclear industry.

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