Here's Why Nuclear Wins in November
Here's Why Nuclear Wins in November
Here’s what wins in the upcoming elections regardless of the outcome at the ballot box.
While on CNBC International’s Squawk Box Europe a little over a week ago, a question was raised regarding the election and my forecast for the outcome.
The truth is, nobody knows who will win the U.S. presidential election. Anybody who dishes out a forecast based on polling, insider knowledge or general notions should be taken with a grain of salt (and a lot of skepticism).
However, I did say to CNBC that the U.S. Senate elections are both crucial and worth investors’ time. What I also told CNBC was that there are sectors that will emerge from the elections as winners and losers. You can catch part of my sit-down interview here.
But there’s more that I didn’t say on air… You see, the world is entering a new age.
Historically, we’ve developed from the Bronze Age to the Iron Age. For energy, we’ve seen similar phases. We went from the “Coal Age” to the “Oil Age.”
What you should be preparing for next is “Electric Age.”
According to the International Energy Agency’s (IEA) Executive Director Fatih Birol “we’re now moving at speed into the Age of Electricity, which will define the global energy system going forward and increasingly be based on clean sources of electricity.”
In the IEA’s World Energy Outlook, their research concludes that electricity demand will rise an estimated six times faster than overall energy consumption between 2023 and 2035.
With extreme heat causing more people to turn to air conditioning, electric and hybrid-electric vehicle trends climbing, and data centers continuing to be turbo-fueled by Artificial Intelligence (AI) – it’s no wonder that energy demands are skyrocketing across nearly every industry.
And while the private sector is driving this growth, the public sector and policymakers are not out of the loop. In fact, energy policy is one of the few successful areas for productive bi-partisan legislation. Nuclear energy has come into even greater focus as energy demands grow.
As we signaled to Premium readers months ago, over the past year, the U.S. has passed a sweeping set of laws supporting the next wave of nuclear energy with bi-partisan support. In an election year, with considerable friction, that’s virtually unheard of.
These pieces of legislation are on nuclear safety, waste management, supply chains and technological advances in nuclear energy generation – along with uranium mining and processing.
Upgrade today and become a Prinsights Premium subscriber. You’ll get unlock premium monthly research coming later this week, exclusive interviews and more.
The White House is also convening members of the private sector and leaders across the U.S. government on the emerging demands that come with AI. On October 24, it detailed an official memo in coordination with the U.S. Department of Energy (DOE) in order to “to streamline permitting, approvals, and incentives for the construction of AI-enabling infrastructure.”
That means that policymakers in the Congress and the White House, together with U.S. government agencies, are all aligned in making energy policy more accommodative to meet the current energy demands and those setting up for the future.
While the memo and even the bi-partisan legislation throughout this year may not have made flashy headlines, investors on Wall Street are both taking notice and taking action.
As a financial and banking leader, Barclays and its researchers reported “AI energy demand can be considered a constant peak that leads to higher overall peak power demand across the grid.”
In fact, Barclays forecasts that AI-focused data centers will use nearly 12% of all energy generated in the U.S. by the end of this decade alone.
As the U.S. is a firm leader in the global data center race, the very real demand for energy, in combination with friendly policy conditions, set a framework for nuclear energy to take off.
Public utilities and electric generation outlets will be a core motivator in this trend. That’s because the nuclear infrastructure they have established in generating and meeting the demands from both consumers and major tech companies is large – and growing by the day.
In an election year, when legislative congestion at the local, state and national levels are often called out in political mudslinging, what we’re seeing is accommodative policy for the private sector to join with utilities for partnerships.
Instead of purely relying on local jurisdictions and states to deliver the critical infrastructure to support operational needs, major tech companies are turning to direct partnerships. We’ve seen this with companies like Dominion Energy partnering with Amazon and Constellation Energy's partnering with Microsoft.
Regardless of who wins the seat in the White House this November, expect this trend to continue in the months and years ahead.
One way to tap into this trend is to consider investing in The Utilities Select Sector SPDR ETF (XLU), which follows a variety of utilities, including electric utilities, at the forefront of the nuclear energy trend.
For Prinsights Premium subscribers, please be sure to check out your exclusive research on two international electric utility companies that are not only powering but leading the energy transition. You can read the article here.
If you’re not a Premium reader, consider joining our community and getting more research, analysis and exclusive insights! You’ll also get access to all of our archived research, analysis and recommendations.
Excellent question! Nuclear fusion (or what the International Energy Agency defines as "the process by which two light atomic nuclei combine to form a single heavier one while releasing massive amounts of energy".has been a topic of research for decades. And it's not near available for large scale commercial usage. However, there have been significant breakthroughs recently, with more realistic estimates of its potential for the mid-2030s. That's mainly on the back of the U.K.-based JET laboratory achieving more energy through a fusion process than ever before earlier this year, China pouring billions of dollars into fusion research using advanced magnets, and the US working on laser-driven fusion methods. With the nuclear energy race gaining momentum and, as we've written here, China is leading that charge from a capacity perspective, it's likely that a useable method will come from China first.
Great piece! I'm really excited about this trend.