3 Reasons to Avoid Nuclear Power

It's been nearly nine months since an earthquake and subsequent tsunami in Japan turned the fortunes of the nuclear world on its head. A nuclear renaissance in the U.S. came to a halt, Germany decided to nix its nuclear plants, and the industry hasn't been the same.

But there are three remaining reasons that I don't think nuclear is a place investors should be looking for value right now.

For safety's sake
Whether it's mechanical failure, human error, or a natural disaster, there are major risks associated with nuclear plants. Boosters may count these as one-time events, but they've happened more than once, and with Japan looking at billions of dollars to rebuild what was lost after the Fukushima Daiichi disaster, the risk should be a major factor in any investment.

Costs are rising, not falling
The cost per watt of nuclear energy is lower than that of many other energy sources, but the costs are heading in the wrong direction. When NRG Energy (NYSE: NRG  ) nixed its planned nuclear expansion, rapidly rising cost estimates were a major factor. Estimates tripled in the planning stage, making the power that would be delivered less cost effective.

Nuclear also benefits from a variety of government subsidies including limited liability, without which nuclear would be nearly impossible to build. And NRG was counting on a government loan guarantee to complete its plant. Compared to other alternative energy sources like wind and solar, whose costs are falling, nuclear is headed in the wrong direction.

It's a dying business
A look at how financial markets view nuclear power may give even the most hardened supporters pause. Rating agencies have downgraded companies with nuclear assets, and nuclear stocks have plummeted this year.

Investors should also consider that in the past year, U.S. nuclear power generation was down 2.7% and worldwide capacity has fallen from 375.5 GW to 365.5 GW. It's true that nuclear is out of favor, and according to trends, renewable energy is picking up the slack.

Foolish bottom line
Despite backlash from commenters when I asked if nuclear was really safe, it turned out it hasn't been for investors since Japan's disaster. There hasn't been a bounce back, and shares of Cameco (NYSE: CCJ  ) , Uranium Energy (NYSE: UEC  ) , and Uranerz Energy (NYSE: URZ  ) have continued to slide.

Considering the trends away from nuclear in many locations worldwide, I don't see this business getting brighter any time soon. Disagree? Leave your thoughts in the comments section below.

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (24) | Recommend This Article (7)

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  • Report this Comment On December 09, 2011, at 11:47 AM, patjoecon wrote:

    Your view is too U.S. centric. China and India will be expanding their nuclear installations like crazy.

    This is just one of the reasons why power is slowly shifting from the Europe/U.S. to Asia.

  • Report this Comment On December 09, 2011, at 12:15 PM, Morgana wrote:

    AND there are healthier alternatives.

  • Report this Comment On December 09, 2011, at 12:23 PM, ghirschel wrote:

    3 Reasons to avoid the idiot that wrote this article:

    1) Safety:

    How many lives are lost and/or shortened by finding, mining, transporting and then burning coal? How many people died last year of the unprecedented number of weather disasters? OK, well, perhaps you don't believe that Coal and greenhouse gasses contribute to our changing climate. What about this then: "the waste produced by coal plants is more radioactive than nuclear counterparts. In fact, the fly ash emitted by a power plant carries into the surrounding environment 100 times more radiation than a nuclear power plant producing the same amount of energy. " And where did I find that gem from? A little known magazine named "Scientific American".

    2) Mathematical Risk vs. reality:

    It's true that, given special circumstances, a Uranium plan can be a risk. On paper. And some are even and real risk. What happened in Japan was a sensational human error: The Japanese in trying to save face made a number of errors: not having a reliable source of power during a disaster, reluctance to using dramatic measures up front, or simply not keeping one reactor running .'. keeping power to the pumps .'. keeping all the plants safe. They all initially survived the double disaster. They failed during recovery. Well, lets think of it this way: your chances of dying from meteor striking the earth is higher than getting killed by lightning, get we all take measures to protect ourselves from lightning. How many would have suffered and died from coal fired plants spewing poison and radiation into the air and soil over the last 40 years or so. How many died from that multi-failure? No one. How many have died from the fighting over oil money funded terrorism? Hundreds of thousands of people around the globe.

    3) The future of nuclear, both foolish and otherwise, is exciting!

    As natural weather disasters continue, as oil prices increase, the air gets worth, we will continue to see that new atomic technologies utilizing much safer and less radioactive Thorium will thrive. Thorium is far more abundant, easier to use and much safer than Uranium. And guess what> It can never be made into a bomb. Why wasn't Thorium used before? Because it can't be made into a bomb. During the cold way, the US Gov. wanted an easy source of Plutonium, so they funded research for Uranium plants. What is China doing? Dumping billions into Thorium plants. Yeah, look it up.

    What about green sources? Well, solar is problematical for 2 big reasons: 1) it takes 1/2 the energy that a solar cell will *ever* generate to actually create it. 2) If there is a volcanic winter, solar plants will fall to 70% or less, perhaps as little 40% for a period. It simply isn't reliable. Wind? Yes, with the latest advancements in plastics, uh... well... isn't that oil? Yup. And they suffer from nimby as well. Actually, wind is a good addition to Thorium nuclear in some places where they can be tolerated. If we get wind right, it's great. Bio-fuels? Nope. If all land resources are dedicated to fuel production, we will still only make a fraction of fuel we need. And we need the right weather, fertilizer (more oil) etc. And that is also susceptible to a volcanic winter.

    Chernobyl aside, nuclear has always be *actually* much safer than any thing else out there. That's a good thing, a bright future. And foolish!

  • Report this Comment On December 09, 2011, at 12:57 PM, PeterLeeds wrote:

    UEC is one of our top picks right now, because nuclear is just getting started. 10 nuclear power plants in China already, 30 under construction as we speak, with dozens more in the permitting phase.

    Even Japan has publicly stated that the meltdown will not alter their nuclear power strategy. This article took an American view, but UEC's future is not at all focused domestically.

    Peter Leeds

  • Report this Comment On December 09, 2011, at 2:10 PM, ghirschel wrote:

    Peter's comment leeds me to offer another 4 letters, LTBR. They haven't been doing well since JQuake, but for that exact reason, they should be (and perhaps will be soon) a big performer. And yes, I am bullish on Atomic energy and own several Atomic stocks.

  • Report this Comment On December 09, 2011, at 2:11 PM, pvsheridan wrote:

    A few of the assorted facts presented in this hype-filled agenda driven goo cannot be refuted . . .

    What points to inveracity on the part of the author is what is called 'lying by omission' and of course the absurd general conclusion that nuclear power is dead. The latter CONFIRMS that the author does not seek to inform, but influence/convince.

    His somewhat inbred "bio" here: http://my.fool.com/profile/TMFFlushDraw/info.aspx?source=iap...

    babbles, as one would expect, about "renewables." Wind? Biomass? Solar panels? Like cotton candy this goo is very trendy but can only offer pimples. Pathetic.

    But let's be antagonistic at worst, and potnetially insightful when er view what the so-called MSM refuses to discuss (I mean . . . trust the MSM?!):

    http://www.youtube.com/watch?v=clfmitG7oww

    http://americanfreepress.net/?p=969

    http://www.youtube.com/watch?v=AS2PIYPGTAc

    http://www.nytimes.com/2011/01/16/world/middleeast/16stuxnet...

    Next, presumably, the author will begin lecturing us about "allies" and "enemies." But since Hoium is demonstrably prone to hype-filled agenda driven goo, his comments on those subjects also cannot be trusted.

  • Report this Comment On December 09, 2011, at 2:13 PM, pvsheridan wrote:

    A few of the assorted facts presented in this hype-filled agenda driven goo cannot be refuted . . .

    What points to inveracity on the part of the author is what is called 'lying by omission' and of course the absurd general conclusion that nuclear power is dead. The latter CONFIRMS that the author does not seek to inform, but influence/convince.

    His somewhat inbred "bio" here: http://my.fool.com/profile/TMFFlushDraw/info.aspx?source=iap...

    babbles, as one would expect, about "renewables." Wind? Biomass? Solar panels? Like cotton candy this goo is very trendy but can only offer pimples. Pathetic.

    But let's be antagonistic at worst, and potentially insightful while reviewing what the so-called MSM refuses to discuss (I mean . . . trust the MSM?!):

    http://www.youtube.com/watch?v=clfmitG7oww

    http://americanfreepress.net/?p=969

    http://www.youtube.com/watch?v=AS2PIYPGTAc

    http://www.nytimes.com/2011/01/16/world/middleeast/16stuxnet...

    Next, presumably, the author will begin lecturing us about "allies" and "enemies." But since Hoium is demonstrably prone to hype-filled agenda driven goo, his comments on those subjects also cannot be trusted.

  • Report this Comment On December 09, 2011, at 3:53 PM, mugginsb wrote:

    I agree with the majority above. With every good comes some bad and as unfortunate the Japan quake was it really hammered the uranium stocks. That's when I bought in - China, India, etc are expanding and the news about Germany abandoning their use of nuclear - well let's just see if that actually unfolds. That statement was more political than reality - be very surprised if they follow through. Mark this day and see what the solid uranium stocks are at a year from now. The big boys the Rio Tinto, Cameco, etc. are looking to buy out smaller players - I think they know a little more than some so called investor gurus or any politician for that matter.

  • Report this Comment On December 09, 2011, at 4:04 PM, bill259 wrote:

    Bill Gates is helping China go nuclear safely, with a new reactor design being developed between Terrapower and Chinese engineers that would have long-lasting, clean energy with minimal waste. Gates expects work on the fourth-gen reactor to cost in excess of $1bn over the next five years, the BBC reports, with the company he founded, Terrapower, helping produce a so-called “traveling wave reactor” that would be far safer than previous models despite running continuously for up to 60 years.

  • Report this Comment On December 09, 2011, at 4:09 PM, EnigmaDude wrote:

    I disagree and recently wrote a blog explaining why now is a good time to invest in nuclear energy (unless you object for moral reasons):

    http://caps.fool.com/Blogs/going-nuclear/677142

  • Report this Comment On December 09, 2011, at 5:19 PM, ghirschel wrote:

    What could *possible* be a moral reason to object to nuclear energy? Perhaps that you like to see people die of radiation and arsenic poisoning from traditional fossil fuels? That you want BIG OIL to make big profits at the expense of arming religious zealots? Is any of that moral?

  • Report this Comment On December 10, 2011, at 7:11 AM, nivekluap wrote:

    As Warren Buffett says, I'm being greedy when others are fearfull. I'm a little longer on CCJ as of Thursday.

    Fool On !

    KD

  • Report this Comment On December 10, 2011, at 8:09 AM, skypilot2005 wrote:

    On December 09, 2011, at 2:11 PM, pvsheridan wrote:

    "The latter CONFIRMS that the author does not seek to inform, but influence/convince."

    Yup.

    Another article that should be in the opinion section.

    Sky Pilot

  • Report this Comment On December 10, 2011, at 2:48 PM, billdick6 wrote:

    Don't be so hard on Hoium - he did get one thing right: i.e. He correctly said:

    " It's been nearly nine months since an earthquake and subsequent tsunami in Japan. "

  • Report this Comment On December 10, 2011, at 3:56 PM, Chontichajim wrote:

    The bottom line is all three nuclear based companies listed at the end of the article are doing poorly and anyone who was long in them in 2011 lost money. The rest of the article includes opinions on why nuclear has been doing so badly. Might not be true in the future but none of the defensive blogs present any reason to invest in nuclear in 2012 except vague references to China and India which seems like only a reason to watch nuclear, but not buy.

    Maybe if I show such passion for LPHI or other loser I had in 2011 it will turn around, but more likely not.

  • Report this Comment On December 11, 2011, at 6:50 AM, cduance wrote:

    The problem with solar power is quite obviously that for half the day its dark and you need to have enough energy being produced at all times to supply the demand which means you need other sources to take over. We need to be infesting in more efficient ways of producing energy I believe our coal power plants are only 30% efficient so they are wasting 70%. Nuclear currently fills a void for 'clean power' I would rather how a nuclear power plant than more coal plants.

  • Report this Comment On December 11, 2011, at 9:31 AM, jerryrun9 wrote:

    As the world's population expands, the demand for energy - from all sources - will only increase.

    Take away nuclear power across the globe and we're left with an energy deficiency that simply cannot be filled by another source any time soon.

    Like it or not, nuclear power will be around at least for our lifetimes - probably longer.

  • Report this Comment On December 11, 2011, at 3:00 PM, devoish wrote:

    Many of the responses taught me a lot.

    I learned Travis is an idiot and a liar. I learned he did get one thing right. I also learned that he is not to have opinions, or at least he should learn not to express them if they are contrary to other opinions expressed in response. I learned he can be expected to break out in a lecture.

    I learned that I am more at risk from a meteor hit than nuclear power problems despite the fact that I have not been hit by a meteor yet Chernobyl, 3 mile, and fukishima have hit many people.

    I learned one problem I will face in the event of a "volcanic winter" is ash on my panel. I learned to be more concerned for a volcanic winter than a nuclear power plant breaking down.

    I learned the risk of a wind tower that falls on a house is comparable to the risk of a nuclear meltdown.

    Thank goodness someone came on here and countered Travis' idiotic lies and used his thinking and detailed facts to save us from Travis's hype filled agenda driven goo.

    There will always be accidents, the world is not a safe place. I know 100% for sure that someday there will be a serious wind tower accident, and 100% for sure that there will be more nuclear power plant accidents. When I compare the risk of that windtower falling on my house, or the risk of a nuclear plant falling on Pennsylvania, I know I don't want that windtower falling on my house.

    Best wishes,

    Steven

  • Report this Comment On December 11, 2011, at 4:01 PM, UgolinoII wrote:

    Nuclear out of favour = Mother of all buying opportunities! If you are investing for the long term then look no further. Peak oil has been and gone. Renewables are a drop in the ocean of the worlds energy needs. More importantly megacorps don't want renewables because they can't control the supply of energy - thats why they love oil. It's a commodity that can be exploited. Sun, wind, tides can't be controlled i.e. monopolised. I would posit that Oil's success is 100% down to this fact, what else can explain the continued reliance on it and refusal (and outright blocking) to develop alternative energy sources.

    Nuclear fuel can be commoditised, supply can be controlled, profit can be engineered. I'm putting a big chunk of my spare change in REE miners and nuclear technology etc, in particular in my kids investments, long term outlook is key i think this is going to take at least 20 but probably more like 50 years to play out. Sure oil still has legs, and I'm going to keep riding that for the next few years, but the day will come though when it does run out, and I don't want to be left holding the bag, I'd rather be looking to get invested in its inevitable replacement now.

    Renewables are nice, but history says consumables will be the most attractive to those who wish to monetize the provision of energy. No facts, all just opinion. All the best investments start with a glimpse of how the future is gonna pan out, and getting in early. Problem is of course, I could be totally wrong :) Fool on!

  • Report this Comment On December 12, 2011, at 5:00 PM, ghirschel wrote:

    Steven,

    If you are going to ironically quote, at least be accurate. I never said that ash would land on a panel, what I said was that in the long term, solar isn't a good bet for bulk generation of power because a volcanic winter will decrease significantly the amount of power that solar can generate for up to several years. And in my lifetime, events that would affect solar generation have occurred.

    It's easy to distort--and then make fun of--someone's opinion. I think it is far more useful to discuss facts. Care to try that feat?

    I said that wind is a great resource but it has to be done on a huge scale to be significant. And NIMBY will likely retard that for years to come. But there are efforts to move the agenda forward, like "Smart from the Start" in Maryland which is an offshore wind farm. Properly done that can be a huge contribution for stable power--if the weather is stable. A Bermuda High sitting in that area for a few days will certainly put a tax on the grid because that occurs during (and contributes to) heat waves. Icing and also be a problem, as well as hurricanes and tornadoes. Finally, there will be the rather bold requirement of transmitting significant power through the water, not impossible to overcome (See popsi's article "Hundreds of Miles of Wind Farms, Networked Under the Sea").

    But, what this country really needs is dependable, weather independent and safe power close to where it's needed. Thorium fueled nuclear plants can provide, with resources available in the USA, hundreds of years of safe power exactly where its needed--when they are build. If China gets the jump on this technology because we aren't getting the funding, we will be buying our plants and licensing the very technology that we should be developing *now* and not waiting because of ridiculousness and mathematically wrong fears. Many still alive huddled under bunkers in the 50s fearing a nuclear attack. But, hundreds and thousands around the world suffer today because of actual daily events from coal fired plants, and the long term "fallout" of trillion $$$ spending to keep oil flowing into the US. Rather than finding safe alternatives to Uranium, it is sooooo much sexier to say "lets eliminate that nasty nuclear and put up 'green' solar" than to be honest and say "Solar and wind is window dressing on a good day, we need meat and potatoes daily predictable power, and that is Thorium until fusion is ready."

    Yes, Thorium isn't sexy....yet.

    Oh, and BTW, the late Eugene Shoemaker estimated the rate of Earth impacts, and suggested that "an event about the size of the nuclear weapon that destroyed Hiroshima occurs about once a year." Remember the event on Jupiter? His comet left an earth sized scar in Jupiter that is still there. It wasn't a windmill falling to Jupiter.

  • Report this Comment On December 19, 2011, at 10:48 PM, ClaraRae wrote:

    (If I am respectful, I will be in the minority on this comment post.)

    I can only say, "Buy, baby, buy!" Buy all the stock you can while this industry is selling low in the market. As another writer said, "We need to be infesting in more efficient ways to produce energy..." as if he's buying a bunch of cockroaches (please, at least get the spelling right, if not the facts).

    I sincerely hope you all buy as much uranium and nuclear industry stock as possible. Bet your kids' futures on it. Let the Darwinian Theory of Survival of the Fittest bring a natural end to your personal theories of Survival of the Greediest. We won't mourn the end of your genetic lines. The sooner you go broke, the quieter it will get and the quicker we can get on with solving energy problems without the clattering views of people stuck in a 1950's time warp. Celebrate that commoditised (not a word) fuel, that controlled supply, that engineered profit. You sound like consuming machines gone wild.

  • Report this Comment On January 03, 2012, at 6:03 PM, ghirschel wrote:

    Clara,

    Interesting you write that you will be respectful, then you write about the genocide of those that don't share your views. Wow. I wonder what happens when you are not respectful? Banish that thought!

    As I've said, there are new technologies and new fuels that will reduce or nearly eliminate the threat of proliferation and even waste byproducts. Google 'gates china thorium' and 'traveling wave reactor' and you will see that last month Gates spend over $1billion of his money to "boot" this new technology. Converting matter to energy is the answer, when we can do it safely. That is the future of power. Nuclear is the only way to produce the power we need with very near 0 emissions. Remember, coal fired plans release significantly more radiation than Uranium powered plants.

  • Report this Comment On January 08, 2012, at 7:42 AM, CuLtUrEd wrote:

    If this guy is a bear and everybody else are bears, Im a bull;)!

    First of all, not only Fukushima is responsable for the uranium market crash, the spot price now 50-51 from 75, took a 25 dollar hit.

    I believe uranium is a buy right here;). We will see whos the mool at the end of the year????

  • Report this Comment On February 08, 2012, at 10:29 AM, ghirschel wrote:

    Anyone who think that Nuke is dead, google this article "Dark Clouds Threaten German Clean Energy Ambitions: Global Implications" and you will see things like "there has been an ominous change in the mainstream German media's tone as the political class finally comes to grips with the unpleasant reality that rooftop solar panels are worthless on short, gray winter days and "For weeks now, the 1.1 million solar power systems in Germany have generated almost no electricity."

    Hmmm... sounds a lot like what I wrote. Go MobyMud! Another line: "They're [The Germans] weighing the costs and benefits, and reaching an entirely predictable conclusion that it's impossible to depend on variable and inherently unreliable power sources as the backbone of an industrial economy. "

    Indeed, all points in my response. The *only* predictable power is Nuclear/Thorium, that is, until we can fugure out fusion.

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