3 Stocks To Play The Nuclear Renaissance
Alex Kimani

After decades of being treated as the black sheep of the energy universe, nuclear energy is enjoying a renaissance in the U.S. and other countries around the world thanks to the need for decarbonization and growing power demand. Indeed, the world is witnessing unprecedented electricity demand growth. Last year,  power sector consulting firm Grid Strategies published a report titled “The Era of Flat Power Demand is Over,” which pointed out that United States grid planners--utilities and regional transmission operators (RTOs)--had nearly doubled growth projections in their five-year demand forecasts. For the first time in decades, demand for electricity in the U.S. is projected to grow by as much as 15% over the next decade driven by the Artificial Intelligence (AI), clean energy manufacturing, and cryptocurrencies boom.

AI, in particular, is expected to drive a lot of that surge in power demand. According to the Electric Power Research Institute (EPRI), data centers will gobble-up up to 9% of total electricity generated in the United States by the end of the decade, up from ~1.5% currentlythanks to the rapid adoption of power-hungry technologies such as generative AI. For some perspective, last year, the U.S. industrial sector energy consumed 1.02 million GWh, good for 26% of U.S. electricity consumption. 

Not surprisingly, nuclear energy is now back in play. Back in March, a total of 34 countries, including the U.S., pledged to use it to reduce reliance on fossil fuels. According to the International Energy Agency's (IEA) report Electricity 2024, nuclear power generation is forecast to reach an all-time high globally in 2025, exceeding the previous record set in 2021 as new reactors begin commercial operations in many markets, including China, India, South Korea, and Europe; output from France climbs and several plants in Japan are restarted. In a highly unusual move, the U.S. federal government has agreed to provide a $1.5 billion loan torestart a nuclear power plant in southwestern Michigan, abandoning earlier plans to decommission it in what will become the first-ever nuclear plant in the U.S. to be revived after abandonment. Meanwhile, California regulators have given the greenlight for the Diablo Canyon plant to operate through 2030 instead of 2025 as the state transitions toward renewable power sources. Pacific Gas & Electric, the plant's owner, said federal aid helped it repay a state loan. 

The IEA now expects global nuclear generation to be almost 10% higher in 2026 than in 2023.

Here are 3 stocks to play the ongoing nuclear energy renaissance.

Constellation Energy

Market Cap: $80.3B

YTD Returns: 120.5%

Baltimore, Maryland-based Constellation Energy Corporation (NASDAQ:CEG) is a power utility that sells natural gas, energy-related products, and sustainable solutions. The company owns approximately 33,094 megawatts of generating capacity consisting of nuclear, wind, solar, natural gas, and hydroelectric assets. 

CEG shares have rocketed after Morgan Stanley issued a bullish forecast for Constellation Energy, predicting that the company’s stock price could surge to $300 per share (16.8% upside) driven by the recent announcement that Constellation will restart the Three Mile Island nuclear power plant, five years after shutting down. Enterprise software giant, Microsoft Corp.(NASDAQ:MSFT) has agreed to buy electricity from the Three Mile Island nuclear power plant in Pennsylvania to power its data centers.

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The nuclear plant suffered the most serious nuclear accident in U.S. history, in 1979, but was still generating power until it shut down in 2019. The plant originally had two reactors; one was damaged in that partial meltdown, and the other reactor operated safely until 2019. However, the plant ultimately shut down because it was unable to compete with cheaper natural gas and renewables on the grid at the time. Thankfully, the surge in power demand growth has exceeded renewable energy growth, meaning companies like Microsoft looking for carbon-free power are turning to the next-best thing: nuclear power.

NuScale Power

Market Cap: $3.0B

YTD Returns: 297.7%

A subsidiary of American multinational engineering and construction firm, Fluor Corp. (NYSE:FLR), NuScale Power Corp.(NYSE:SMR)  develops modular light water reactor nuclear power plants to supply energy for electrical generation, district heating, desalination, hydrogen production, and other process heat applications.

Small modular nuclear reactors (SMRs) are advanced nuclear reactors with power capacities that range from 50-300 MW(e) per unit, compared to 700+ MW(e) per unit for traditional nuclear power reactors. Given their smaller footprint, SMRs can be sited on locations not suitable for larger nuclear power plants, such as retired coal plants. Prefabricated SMR units can be manufactured, shipped and then installed on site, making them more affordable to build than large power reactors. Additionally, SMRs offer significant savings in cost and construction time, and can also be deployed incrementally to match increasing power demand. Another key advantage: SMRs have reduced fuel requirements, and can be refueled every 3 to 7 years compared to between 1 and 2 years for conventional nuclear plants. Indeed, some SMRs are designed to operate for up to 30 years without refueling.

The U.S. Department of Energy has so far spent $1.2B on SMR R&D and is projected to spend nearly $6B over the next decade. Last year, the U.S. Nuclear Regulatory Commission (NRC) certified NuScale’s VOYGR 77 MW SMR in Poland, the first ever SMR to be approved in the country.

Centrus Energy

Market Cap: $892M

YTD Returns: -4.8%

Centrus Energy Corp. (NYSE:LEU) supplies nuclear fuel components and services for the nuclear power industry in the United States, Belgium, Japan, and internationally. 

Three years ago, NRC approved Centrus Energy’s request to make High Assay Low-Enriched Uranium (HALEU) at its enrichment facility in Piketon, Ohio, becoming the first company in the Western world outside Russia to do so. A year later, the U.S. Department of Energy (DoE) announced a ~$150 million cost-shared award to American Centrifuge Operating, LLC, a subsidiary of Centrus Energy. HALEU is a nuclear fuel material enriched to a higher degree (between 5% and 20%) in the fissile isotope U-235. According to the World Nuclear Association, applications for HALEU are currently limited to research reactors and medical isotope production; however, HALEU will be needed for more than half of the SMRs currently in development. HALEU is only currently available from TENEX, a Rosatom subsidiary.

Although LEU shares are still in the red in the year-to-date, they have jumped nearly 60% over the past three weeks after the company signed a nuclear fuel supply deal with Korea Hydro & Nuclear Power (KHNP). The purchase commitment from KHNP covers a decade of deliveries of Low-Enriched Uranium (LEU) to help fuel Korea's large fleet of reactors.

By Alex Kimani for Oilprice.com

Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com. 

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