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Sam Dickie: Fisher Funds expert on nuclear energy's role in the future · Best of Business

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  Speaker 1: You're listening to a podcast from News Talks be follow
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  Speaker 2: Nuclear energy is in the headlines recently is the US.
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  Speaker 2: Nuclear energy is in the headlines as the US considers
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  Speaker 2: its energy future and support for nuclear energy is making
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  Speaker 2: a bit of resurgence. Now, I know it can be
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  Speaker 2: an emotive topic, but of course energy demand is rising,
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  Speaker 2: not least driven by the rising demands of energy hungry
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  Speaker 2: data centers, the likes of AI and cryptocurrency, and we
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  Speaker 2: need clean energy sources. Some say that nuclear fits that.
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  Speaker 2: Bill Sam Dicky from Fisher Funds is with us for
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  Speaker 2: more on this, Kilda Sam, Oh, sorry we lost you there,
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  Speaker 2: So talk to us a little bit about nuclear energy
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  Speaker 2: and remind us about nuclear energy demand today compared to
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  Speaker 2: the past and the future.
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  Speaker 3: Yes, des think a hot topic, Jack. And if you
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  Speaker 3: look at total US electricity demand, the really interesting thing
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  Speaker 3: is it's basically flat in the US for fifteen to
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  Speaker 3: twenty years. So demand growth of households has been basically
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  Speaker 3: entirely offset by declining demand from industry. As the US
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  Speaker 3: is moved manufacturing offshore, historically called as we know offshoring. However,
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  Speaker 3: depending on which forecast do you believe after decades of
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  Speaker 3: that flat demand demand growth is going to be about
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  Speaker 3: five percent per annum for the next five to ten years,
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  Speaker 3: which is a huge shift. And why is that? It's threefold? Ready,
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  Speaker 3: The first is a ramp up in these extremely energy
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  Speaker 3: hungry data centers as we store and utilize tons and
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  Speaker 3: tons more data. The second thing is the trend towards
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  Speaker 3: on shoring. So how's that for a full circle? Is
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  Speaker 3: the US moves manufacturing back on shore. And the third
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  Speaker 3: thing is of course longer term, as we electrify everything.
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  Speaker 2: So, Sam, what is actually happening with these big deals
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  Speaker 2: that are being struck?
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  Speaker 3: Yeah, So, I mean, just to give you some context
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  Speaker 3: on the US energy mix today and when nuclear fits
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  Speaker 3: in US electricity that flat demand we've talked about, and
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  Speaker 3: therefore that there's been no need to develop any more
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  Speaker 3: generation plants of any type. It is about sixty percent
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  Speaker 3: fossil fuels, twenty percent renewables, and twenty percent nuclear. And
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  Speaker 3: nuclear has been shrinking for thirty to forty years. So
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  Speaker 3: you might recall the three Mile Island debarcle in nineteen
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  Speaker 3: seventy nine with a small amount of radioactive material release
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  Speaker 3: in an accident in Pennsylvania, and because of that, the
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  Speaker 3: number of nuclear reactors in the US has been shrinking
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  Speaker 3: for decades, from about one hundred and fifteen to ninety
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  Speaker 3: four today. And right now there's been some mega deal struck.
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  Speaker 3: So on the back of this pick up and demand,
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  Speaker 3: we've seen the fact there's been no supply of electricity
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  Speaker 3: for decades or no increase in supply, plus government subsidizen
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  Speaker 3: and tax cuts have seen the construction of the reramping
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  Speaker 3: of existing nuclear plants begin in earnest. And Microsoft just
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  Speaker 3: signed a big deal with Constellation Energy to bring some
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  Speaker 3: of the three Mile Island facilities back on stream. So
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  Speaker 3: another full circle. And soon after that, Metas said they
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  Speaker 3: are looking at signing super long term power contracts with
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  Speaker 3: nuclear plants to power the data centers.
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  Speaker 2: So talk to us a little bit about the perceived
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  Speaker 2: or actual pros and cons of using nuclear as an
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  Speaker 2: energy source.
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  Speaker 3: Definitely stumbling into a lively in the motive debate here,
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  Speaker 3: lively in the motive for good reason, Jack. But the
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  Speaker 3: pros are and there's a fairly well recognized is it's
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  Speaker 3: considered a clean energy source, so zero carbon emissions during operation.
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  Speaker 3: But the second thing is nuclear plants run at about
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  Speaker 3: ninety two percent capacity utilization, which is key because we
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  Speaker 3: know that wind farms run it more like thirty percent,
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  Speaker 3: and solar farms more like twenty to twenty five percent,
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  Speaker 3: and even gas is in the middle. And the other
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  Speaker 3: thing is these plants last for sixty to eighty years.
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  Speaker 3: So that's the pros the cons. While it does generate
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  Speaker 3: clean electricity, dealing with spent nuclear fuel as an ongoing
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  Speaker 3: problem now about thirty percent of out as recycle today,
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  Speaker 3: but obviously seventy percent that needs to be dealt with.
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  Speaker 3: The second thing that the plants are very expensive, they
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  Speaker 3: take years to build, and because the industry has been
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  Speaker 3: shrinking in the US, growing like a weed in China,
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  Speaker 3: by the way, but shrinking in the US, the skill
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  Speaker 3: sets are just not there to develop.
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  Speaker 2: These plants interesting.
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  Speaker 3: And then of course you have the risk, even though
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  Speaker 3: it's very rare of a catastrophic spill or accident.
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  Speaker 2: Yes, I mean and that is it is a risk,
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  Speaker 2: But honestly, you don't need to convince me, especially for
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  Speaker 2: the energy transition. I mean, you know, if you think
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  Speaker 2: nuclear energy presents a health risk, wait till you hear
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  Speaker 2: about coal fired plants. So what does all of this
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  Speaker 2: mean for investors.
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  Speaker 3: Then, well, I mean there's been some pretty interesting moves
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  Speaker 3: going on on the back of it. Some of these
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  Speaker 3: energy suppliers like Constellation Energy you have been mopping up,
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  Speaker 3: some of these nuclear plants have been on fire. And
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  Speaker 3: the uranium price, which of course is the fuel source
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  Speaker 3: for nuclear reactors, has jumped from a price of around
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  Speaker 3: twenty bucks a pound a couple of years ago to
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  Speaker 3: a peak of one hundred and ten dollars earlier this year.
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  Speaker 3: But I guess more broadly, it's a reminder that we're
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  Speaker 3: lucky in Zealand to have such a bun and clean
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  Speaker 3: hydro energy, and not to mention, we don't have a
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  Speaker 3: such a spike in demand from data centers and resturing
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  Speaker 3: and manufacturing to upset the apple cut. But I think
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  Speaker 3: more broadly globally that it's going to these new demand
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  Speaker 3: sources are going to drive some really interesting decisions. So
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  Speaker 3: it's one to watch, and I'm not saying we should
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  Speaker 3: watch what China's doing, but but China is absolutely full
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  Speaker 3: steam ahead here. Fifty five reactors today are whopping, twenty
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  Speaker 3: three under construction and as well over another one hundred
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  Speaker 3: reactors under broad long term consideration.
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  Speaker 2: Wow. Yeah, that's amazing. Thanks Sam. That's Sam Dicky from
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  Speaker 2: Fisher Funds. In a couple of minutes on new ste ZDB,
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  Speaker 2: out of UK and Europe. Right now, it's fourteen to seven.
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