Electricity (Does NOT) Grows on Trees

Hey Influence Traders:


Electric vehicles were front page news in 2021.


They received massive government backing in the form of policy and subsidies.


A number of new entrants hit the market – some were duds but some made a splash.


Even the old guard, including Ford (Ticker: F) and General Motors (Ticker: GM) went green.


And Tesla (Ticker: TSLA), the industry leader, crushed 4Q Wall Street estimates by delivering 308,600 cars globally.


TSLA sold 936,000 cars in 2021.


Those numbers helped TSLA achieve a 50% annual gain in its share price despite supply-chain difficulties.


By the end of 2021, TSLA had passed the $1 trillion market cap.


The Biden administration is showing no signs of slowing its push for the country to adopt electric vehicles.


And the recent $1.2 trillion infrastructure bill included money for EV adoption for both consumers and the federal fleet.


The past year was a good start, but it looks like 2022 will be the year of the EV!


The question is, how do you create the electricity to power EVs?


It does NOT grow on trees.


Electricity is a Dirty Business


As the old adage goes, “my Tesla runs on coal.”


“Clean” forms of energy production, such as wind and solar, are hard to implement.


They require a lot of mining, carbon heavy production, and are not efficient at large scale.

It is why their adoption has been slow.


What About Nuclear?


One efficient form of electricity production is nuclear energy.


But nuclear has a long history of protest … some deserved and some not.


It looked, for a fleeting instant, that nuclear power would get a bump this week.


But it instead took one on the chin.


A European commission was planning on classifying some natural gas and nuclear plants as sustainable energy projects.


The natural gas projects would get the moniker if they produced under 270 grams of carbon dioxide per kilowatt hour.


The nuclear plants would get the moniker if they met certain environmental and wastewater criteria.


The commission recognized that such energy production was essential for transitioning to a renewable energy future.


That announcement fired up green energy investors but left the green environmental protestors a little miffed.


But the hopes for a nuclear Europe were all but dashed when Germany declared nuclear power “dangerous” and rejected the EU’s plan.


Germany has long fretted over fusion energy.


The country is set to turn off its remaining three nuclear power plants at the end of this year.

At the same time, it wants to phase out coal by 2030, which does not leave it with many current options besides natural gas.


Germany is committed to going “climate neutral” by 2045.


It sees natural gas as a “bridge technology” that it will replace with non-polluting alternatives such as hydrogen produced with renewable energy.


Some argue that Germany is out of step with the rest of the EU on this issue.


France, for example, is modernizing existing reactors and building new ones to meet its future energy needs.


The U.S. View


The U.S. seems to be a blend of the two EU views.


We know we need it.


But a few decades-old headline risks, such as Three Mile Island, have caused many to balk at nuclear adoption.


Even the Green New Deal crowd does not take nuclear as a serious option. 


Nuclear reactors generate about 20% of all of the electricity used in the United States. 


Nuclear power currently makes up more than half of the nation’s carbon-free electricity. 

It should make up more.


It is clean, safe and more efficient than other “green” energy alternatives.


Nuclear energy is pivotal to any switch to renewable energy.


Uranium Provides the Power


Uranium is the fuel most widely used in nuclear reactors.


One pellet of enriched uranium is approximately 1-inch long and can generate about the same amount of electricity as one ton of coal.


A Nuclear Push


Although it flew under the radar, 2021 was a big year for nuclear energy in the States.


The U.S. Department of Energy (DOE) spent a record $1.3 billion to support nuclear energy research in 2021 and is receiving billions more through the $1.2 trillion Infrastructure bill to support the current U.S. reactor fleet and help deploy new advanced reactor designs. 


The bill includes $6 billion to establish a new Civil Nuclear Credit Program to help keep the nation’s existing reactor fleet operating safely as long as technically possible.


The bill also includes $2.5 billion to support the demonstration of new power plant designs.


Those demonstrations will be carried out under the recently established Office of Clean Energy Demonstrations at DOE.


Part of the DOE push will be to ensure uranium supply chains.


The DOE recently announced plans to establish a High-Assay Low-Enriched Uranium (HALEU) Availability program to address the fuel needs of the U.S. nuclear industry. 


DOE’s demonstration reactors will require nearly 40 metric tons of HALEU by 2030 and the Nuclear Energy Institute estimates nearly 3,000 metric tons of HALEU will be needed by 2035.


This flow of money is benefiting some nuclear companies.


Fuel Companies


There are a lot of solid uranium producers, like Canada’s Denison Mines Corp. (Ticker: DNN), which mines uranium in the Athabasca Basin region of northern Saskatchewan, Canada.


But some U.S. producers should also do well.


Nuclear Fuel Services, Inc., a subsidiary of Lynchburg, VA, headquartered BWX Technologies, Inc. (TICKER: BWXT), was awarded a $57.5mm contract from the National Nuclear Security Administration (NNSA) to convert natural or depleted uranium (DU) to purified highly enriched uranium (HEU) metal. 


BWXT is an American supplier of nuclear components, technologies, and fuel to different nuclear plants operated within the United States.


It also supports governments and private entities that operate nuclear facilities through technical services, management, and site operations.


Centrus Energy Corporation (Ticker: LEU), which is headquartered in Bethesda, Maryland, supplies nuclear fuel and services to U.S. and foreign clients.


The company’s primary business is providing highly enriched uranium.


It is also a leader in advanced gas centrifuge processing systems.


Uranium Energy Corp. (Ticker: UEC) is an American uranium mining and exploration company based in Corpus Christi, Texas.


The company currently has control of one of the country’s most prominent historical uranium deposits and is now eyeing the acquisition of properties in the southwest.


Plant Production/Overhaul


The state of Wyoming is building a next-generation nuclear power plant at a soon-to-be-retired coal-fired plant. 


The project is a joint venture between Bill Gate’s TerraPower (Ticker: TERP) and Warren Buffett’s Berkshire Hathaway owned PacifiCorp (Ticker: PPWLM)


The project will feature a 345-megawatt sodium-cooled fast reactor with a molten salt-based energy storage system, which would produce enough power for roughly 250,000 homes.


Some of the DOE money will go to its partnering with Exelon Nuclear (Ticker: EXC) to complete the industry’s first fully digital safety system upgrade at the Limerick Generating Station in Pennsylvania.


$92 million will be spent over five years to enable automation, decrease system interruptions, and improve plant performance. 


If successful, the same blueprint will be applied to other U.S. boiling water reactors.


EXC is responsible for supplying 10 million customers with power and electricity through its 23 nuclear reactors and 14 nuclear power plants that are capable of generating more than 35,500 megawatts of energy.


Trading guru Andrew Giovinazzi and I had some home runs this past year with green energy.


Ford did particularly well in the Capitol Gains portfolio.


We also know that nuclear has to be a part of any green energy revolution.


That is why we are adding nuclear to our trading list. 


Cutting Through The Noise For You,

Frank

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