Ever since Rocketdyne lit homes
and businesses in Moorpark, Calif., with atomic energy in 1957—followed two
years later by a partial meltdown at the reactor and contamination claims that
continue to this day—nuclear power has carried uneasy promises. But this
industry has never functioned in a way that pleases Wall Street because of its
heavy reliance on government subsidies. And, of course, no one has successfully
figured out how to dispose of radioactive waste or guarantee that rogue states
won’t use the technology to build weapons of mass destruction.
But an increasing number of private companies and their
investors are seeing potential in this area for an emissions-free way to meet
part of the escalating global demand for power that also reduces dependence on
oil. Since 2002, the Bush administration has had plans in place to
streamline the permit process for new reactors; the first two of those permits
were issued in March. In a 2001 speech, Bush stated, "France, our friend and
ally, gets 80 percent of its electricity from nuclear power." It is a
refrain he has repeated every year—albeit with some changes—in his call for
alternative energy sources. Investors may find more reassurance in Ukraine’s
plan to build 11 reactors by 2030—on the basis that another Chernobyl is
unlikely and dependence on Russian oil is a greater source of unease.
Grant Rogers, founder of investment firm Metis Capital
Management in San Francisco, is a nuclear enthusiast. He has advised a number of
clients to put 5 percent of their portfolio into nuclear-related investments.
These include construction and equipment companies, such as General Electric and
Westinghouse, and businesses specializing in plant maintenance or waste
disposal. Uranium mines that lay moribund in the 1980s and 1990s are now back in
business. The spot price of uranium has been an alpha bet among hedge funds,
rising from $9.25 per pound in late 2000 to $113 in mid-April, according to
figures from the tracking firm TradeTech.
The U.S. boasts enough demand to spur investments, but interest
grows wherever power needs grow. The World Nuclear Association, a consortium of
businesses, universities and government agencies, cites the following figures:
China has nine plants in operation now, with 50 more proposed; only 2.8 percent
of India’s energy stemmed from nuclear reactors in 2005, but the figure should
jump to 25 percent by 2050. South Africa has two plants on line and 24 in the
proposal stage; Russia has 31 with 18 more under study.
A year ago, Rogers advised Barbara Burtelson, a real estate
agent near San Francisco, to look into nuclear power. Since then, her
investments in that area have returned 65 percent. "I think it’s something that
has long been neglected in the U.S., but it’s a very clean source of energy,"
she says.
Richard Branson, a vocal supporter of environmental businesses,
applauds nuclear power (at least in theory), although he has yet to invest any
capital into this sector. "The biggest problem with nuclear power is knowing how
to deal with the waste," he says. "Maybe if our space program gets going we
could send it off into the sun."
The industry has a great deal to say about the next generation
of nuclear plants, the first of which should be online within two years. These
plants will have fewer moving parts, making ongoing maintenance easier.
Plants built with simpler designs might solve the other big
risk of nuclear power: cost overruns. A study by the Department of Energy found
that plants built between 1966 and 1977 often ended up costing almost twice as
much as developers predicted. Even now, South Carolina’s Savannah River Site, a
nuclear-fuel processing facility, is expected to cost $5 billion—five times a
2002 forecast.
Debra Ryono is associate managing editor of Worth.
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