US investors have been far too focused on the domestic policy toward nuclear power plants and the long lead time required building new reactors. But the reality is that the nation has only one new reactor under construction right now and nine in advanced stages of planning. Compare that to the 27 reactors under construction in China and the 50 additional reactors in advanced stages of planning.
While the US has growth stories of its own in shale oil and gas plays, the growth story for nuclear power, much like the growth story for oil and natural gas demand, is centered in the emerging markets.
Source: World Nuclear Association
As you can see, 61 reactors are under construction around the world, with a total maximum capacity of 65 GW. Furthermore, as Jim Fink describes in his recent Investing Daily article, Investing in Nuclear Power Remains a Compelling Choice, in addition to the 61 nuclear reactors under construction right now, 150 more are planned to come online over the next 10 years.
China is home to almost half of all nuclear power capacity (measured in GW) under construction. If we add in India, Russia and South Korea, the total jumps to well over 80 percent. The US, France, Canada and other developed markets are building reactors, but these projects account for only a tiny share of the 65 GW of capacity under construction.
Emerging markets have been even more vociferous in their defense of nuclear power. Five days after the earthquake crippled the Fukushima Dai-ichi plant, China halted approvals for new reactors until a safety review could be conducted and new safety plans put in place. But inspections are already winding down, and the country plans to release its new safety plan and resume approvals in August. Senior Chinese officials have indicated that the country will meet its target of 70 GW of nuclear power capacity by 2020 despite the post-Fukushima freeze.
China can rightfully claim that its fleet of reactors is among the safest in the world because the country is building third-generation plants such as the Westinghouse AP1000, an advanced reactor that can be cooled without access to external power sources. This feature would have prevented the partial meltdown at Fukushima.
Russia also ordered a safety review of its nuclear power plants, but the government has unequivocally stated that it will not abandon nuclear power and will continue to build new power plants. Russia also continues to build plants in other nations, including planned Russian-designed reactors in Turkey and Belarus. In fact, the latter deal was inked after the earthquake hit Fukushima Dai-ichi.
Russian Prime Minister Vladimir Putin has long been a proponent of nuclear power and has criticized Germany’s anti-nuclear stance on several occasions. For example, at a conference in late 2010, Putin chided German business leaders about the country’s plan to gradually phase out its nuclear reactors, observing that “The German public does not like the nuclear power industry for some reason“ and adding “I cannot understand what fuel you will take for heating.” He followed up this comment with an incisive joke: You do not want gas, you do not develop the nuclear power industry, so you will heat with firewood?...Then you will have to go to Siberia to buy the firewood.”
But Germany’s decision to accelerate the closure of its nuclear plants will have Russian gas producers laughing all the way to the bank: Germany will need to import more natural gas to offset lost nuclear power capacity and provide baseload power to support the country’s growing dependence on renewable energy sources. Germany already imports more than half of its natural gas from Russia.
Russia’s aggressive build-out of nuclear plants in recent years is partly motivated by a desire to free up more natural gas for export. Ironically, this means that Russia is building nuclear power plants to support Germany’s efforts to shut down its domestic reactors.
Finally, India also ordered a safety review of its nuclear reactors, but Prime Minister Manmohan Singh has emphasized repeatedly that India must make use of nuclear power to meet its growing demand for electricity and emissions targets. Singh stated that safety standards for new Indian reactors would be world-class and that the country stands by its target of increasing nuclear capacity from about 5,000 megawatts (MW) today to 20,000 MW by 2020. Singh stated that further expansion is possible after 2020, though no firm decisions have been made.
In the immediate aftermath of Fukushima, many speculated that the Fukushima disaster would strangle the global nuclear renaissance. This jaundiced projection hasn’t come to fruition. Countries that were already anti-nuclear have hardened their stance, but the growth story is intact in China, India, Russia and other emerging markets. In short, the worst accident since Chernobyl has had a surprisingly modest impact on the global nuclear power industry.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.