How Another Emerging Nation Is Going Nuclear

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

Rosatom, Russia's state-owned nuclear power company, just signed a memorandum of understanding with South Africa to provide end-to-end nuclear plant delivery and operation. South Africa's Integrated Resource Plan calls for 9.6 Gigawatts of nuclear power by 2035. It plans to deliver that capacity through three nuclear plants. 

Russian President Putin and South African President Zuma had agreed in March to partner on a portfolio of power investments, especially nuclear. They met at the 5th BRICS Summit in Durban, South Africa last March. South Africa is the smallest of the BRICS partners, led by Russia, China, India, and Brazil.

South Africa supplies just 5% of its 18 GW capacity through two nuclear power plants operated by state-owned electricity utility Eskom. South Africa plans to add 9.6 GW of capacity by 2030-2035, with power to start-up by 2023. Eskom coal plants generate most of the power in the northeastern section of the country. Many of these plants are retiring through 2020.

Eskom's Koeberg nuclear plants were built and are being maintained by France's Areva (NASDAQOTH: ARVCF  ) . 

After Fukushima, many developing nations are turning to renewable and nuclear energy to grow their energy portfolios.

Post-Fukusihma nuclear power
The March 2011 tsunami and earthquake weakened TEPCO's Fukushima nuclear power plant, located 150 miles northeast of Tokyo. The Fukushima reactors delivered 2.7 GW of capacity to the heavily industrialized Tokyo area.

Radioactivity leaked from the plant. The lack of a culture of safety, as well as deteriorating controls, were cited as contributing factors. Mass evacuations resulted. Further radioactive hot spots have been detected in recent months. 

The world initially went anti-nuclear with the Greens of Germany leading the way. Germany declared it would eliminate its nuclear fleet by 2022. Pre-Fukushima, nuclear power accounts for 25% of the 163 GW generated in Germany. By 2013 nuclear power accounted for just 18%.

New coal and natural gas fired plants, along with renewable energy sources, are taking up the slack amid greenhouse gas emission targets in a policy called the Energiewende, or "energy transition." Much of this policy will require even greater reliance on Russian crude oil and natural gas.

Siemens (NASDAQOTH: SIEGY  ) built all of Germany's nuclear fleet of 17 units. The last unit was commissioned in 1989. The fleet has since been reduced to nine reactors producing 12 GW of capacity. E.ON and RWE (NASDAQOTH: RWEOY  ) run most of the remaining nuclear plants. 

With Germany out of the picture, in the E.U. only Italy has voted nuclear out. All other E.U. countries are stepping up their plans for nuclear power plant development, albeit under even stricter safety guidelines.

Japan is reducing its dependency on nuclear power by over 50%. In 2011 Japan's electricity capacity of was split evenly among nuclear, hydro, coal/oil, and combustible gas. After Fukushima, with mounting dependence on foreign fossil fuels, and the win by the Liberal Democratic Party, nuclear is back in the electricity portfolio. 

The German reduction in its nuclear fleet accounts for about 5% of global uranium oxide supply. Startups and new plants in France alone over the next three years will be enough to soak up the excess supply. 

Back to South Africa
Vying for contracts to build nuclear power plants in South Africa are Areva and Rosatom. Early in 2011 Areva stepped up its involvement with the Nuclear Energy Corporation of South Africa, NECSA. Rosatom just registered a marketing office in Johannesburg.

Areva built the two pressurized water reactors at Eskom's Koeberg site. They produce 5%-6% of South Africa's total power requirements. LESEDI Nuclear Services, in which Areva has a 51% share, provides construction, operation and maintenance support and services to Eskom and AREVA. 

Requests for bids are expected in early 2014. The contractor will be expected on-site building in 2016. Over 9.6 GW of new capacity will be on-line by 2023. Up to 40% local fuel and construction content is expected as well.

The company that can deliver $5,800 per kilowatt installed capacity on time will probably win. Influencing Eskom's assessment of that probability will be French and Russian government guarantees and other material support.

What does OPEC stand to lose from this Buffett favorite?
Imagine a company that rents a very specific and valuable piece of machinery for $41,000... per hour (that's almost as much as the average American makes in a year!). And Warren Buffett is so confident in this company's can't-live-without-it business model, he just loaded up on 8.8 million shares. An exclusive, brand-new Motley Fool report reveals the company we're calling OPEC's Worst Nightmare. Just click HERE to uncover the name of this industry-leading stock... and join Buffett in his quest for a veritable LANDSLIDE of profits!


Read/Post Comments (2) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 31, 2013, at 1:50 AM, 23boss wrote:

    There are issues with nuclear power plants in India. Like Fukushima these power plants are locates in most sensitive areas. These areas are vulnerable to Tsunami like natural calamities. Kudankulam nuclear power plant is the one of the example of most sensitive power plant. IAEA must take pre-emptive steps to avoid any accident worse than fukushima.

  • Report this Comment On December 31, 2013, at 2:38 AM, Galina wrote:

    It is our own human hands which are taking humanity to the edge of nuclear disaters. Despite of number of accords and international efforts nuclear proliferation is getting speed day by day. States are supported by one another to transfer of technology and materials. Just as a case study, India is not a signatory of NPT but it is working very high on nuclear lines with multiple nuclear cooperation deals with other countries. States in order to gain their own interests facilitate the nuclear technology to others. This in turns endangered the whole globe at the expense of vested interests.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2779508, ~/Articles/ArticleHandler.aspx, 9/29/2016 8:29:43 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 10 hours ago Sponsored by:
DOW 18,339.24 110.94 0.61%
S&P 500 2,171.37 11.44 0.53%
NASD 5,318.55 0.00 0.00%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/26/2016 9:49 AM
ARVCF $6.83 Down +0.00 +0.00%
AREVA CIP CAPS Rating: No stars
RWEOY $16.80 Up +0.48 +2.94%
RWE AG ORD SP ADR CAPS Rating: No stars
SIEGY $117.55 Up +0.61 +0.52%
Siemens AG (ADR) CAPS Rating: ****