For the second time since the Fukushima disaster and the third time in over 40 years, Japan is entirely nuclear-free. With proponents and opponents battling fiercely over the future of nuclear power in Japan, let's take a look at whether the United States should be nuclear-free.
Japan's nuclear notions
Japan's last operating nuclear plant went offline this week for an inspection, and public pressure has kept any restart date questionable. After embracing nuclear power more than four decades ago, Japanese are split over the future of this energy source.
Prime Minister Shinzo Abe and utilities are all for firing up the nation's 50 idle reactors to keep supply steady and avoid major blackouts. But the general public and environmental groups remain skeptical on nuclear notions, citing everything from general safety concerns to an unprecedented opportunity to embrace alternative energies.
If the United States shuttered its 104 nuclear reactors, 20% of our nation's total electricity supply would immediately disappear. With 20% of that 20% to its name, Exelon's (NYSE:EXC) 19,000 MW of nuclear capacity alone would cut 4% of the United States' power.
With the recent rise of natural gas and renewables, a decline in nuclear might not seem so bad. Natural gas has already surpassed coal as our largest source of electricity, and wind power alone is expected to triple capacity in the next three years. Crude oil is a relic of the past for electricity, and we've managed fine with recent coal closures.
Fuel sources have come and gone over the past 60 years, and we've still got plenty of power today.
Precedent for a predicament
But survival alone isn't the ultimate goal, and cutting out nuclear may hit closer to home than we think. Even before Edison International (NYSE:EIX) announced that it would shut down the remainder of a faulty Southern California nuclear plant, extended outages pushed wholesale power prices through the roof. For more than a year, South Cali prices clocked in 12% higher than North Cali as the area fired up expensive (and more polluting) alternatives to keep power pumping to Los Angeles and San Diego.
Over on the East Coast, Entergy's (NYSE:ETR) anticipated closure of its Vermont Yankee nuclear plant pushed up natural gas futures contracts. The day the utility announced the closure of its 604 MW plant, the forward basis swap for January 2015 (the month after Yankee goes offline) increased around $0.50 per MMBtu, an approximate 7% spike.
And that's just for now. New England natural gas generation has jumped from 30% of total electricity in 2011 to 52% in 2012, and nuclear's exit would undoubtedly imply increasing reliance on an increasingly expensive fuel.
Foolish bottom line
If the United States said no to nuclear, we'd be in a tight spot. Nuclear provides cheap baseload electricity with enviable consistency. But there are advantages to a nuclear-free nation. If supportive policy jumps in to save the day, the generation gap could put the U.S. on a fast track to ramping up alternative energies. Duke Energy's (NYSE:DUK) recent win for wind energy storage would need a massive influx of R&D to expand beyond a 36 MW battery, and new energy sources like Dominion's (NYSE:D) long-term lease for offshore wind would need a timelier timeline than ten years from now.
Our nation would also need to take a hard look at its power system, decentralizing generation via smart investments in smart grid technology. And of course, natural gas would head center stage, paving the way for any utility with capacity to expand generation and transmission operations.
Japan's nuclear-free for now – and it may stay that way. But the United States isn't about to follow suit. Market prices play a bigger role than public opinion, and our nation's energy portfolio will continue to flex to the fuels that provide a present and future balance of consistency and cost.
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