With uranium prices at 7-year lows trading just shy of $40 per pound, it is getting hard to overlook the potential for small modular nuclear reactors (SMRs), nuclear plants that are 300 megawatts (MW) or less in size, to gain more acceptance here in the U.S. There has already been an informal blessing that has enabled Babcock & Wilcox (NYSE:BWXT) to move its new designs forward.
Historically, the three biggest problems plaguing the growth for building nuclear reactors have been safety, long-term waste, and cost. However, the costs of construction of SMRs would range from a few hundred million dollars to $2 billion, versus over $10 billion for a twin-unit nuclear complex. Granted, SMRs are not built to compete with output levels from new nuclear plants, and they are really only a quarter of the power seen in big reactors. But these SMRs can help reduce our carbon footprint. SMRs produce dependable baseload power that is more affordable for isolated communities, and they can be used in remote areas by energy and metals production companies while traditional reactors cannot.
I'm expecting the U.S. government to further try and position itself to win the war on carbon by recommitting to modern nuclear power in a big way, especially due to my financing concerns if we simply wait and bank our energy future on natural gas prices remaining low forever. A move to further commit to nuclear energy could bode very well for uranium miners, including Cameco (NYSE:CCJ).
John Licata has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.