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What Role Will Nuclear Play In The Future Of U.S. Energy?

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What Role Will Nuclear Play In The Future Of U.S. Energy?

The future of U.S. energy is lining up to be a battle between shale gas and renewables, a development which might leave U.S. nuclear energy in the dark. According to Goldman Sachs analyst Michael Lapides, lower energy prices driven by the U.S. shale gas revolution is forcing the retirement of nuclear energy plants.

U.S. wholesale power prices are down 45–70 percent at major hubs since the 2006–2008 period. The primary victims have been coal plants, which have been pressured by environmental costs, and nuclear plants.

The process of replacing nuclear energy as plants go offline is bad news for environmentalists, but it’s good news for natural gas investors.

“Our analysis implies natural gas demand would increase by 0.4–7.6 Bcf/day (vs. 2015 levels of 75.3 Bfc/day) — albeit over a 20–30-year time horizon,” Lapides explained.

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He noted that this increase in base-load natural gas generation would up carbon dioxide emissions by 8–150 million tons.

Set To Benefit

According to Goldman, there are three types of companies poised to benefit on the transition away from nuclear energy: companies that develop renewable, companies that own existing gas-fired capacity and renewable/gas equipment suppliers.

Goldman mentioned the following stocks as well-positioned:

  • First Solar, Inc. (NASDAQ: FSLR)
  • NextEra Energy Inc (NYSE: NEE)
  • Calpine Corporation (NYSE: CPN)
  • Dynergy Inc. (NYSE: DYN)
  • General Electric Company (NYSE: GE)

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Disclosure: The author holds no position in the stocks mentioned.

Latest Ratings for FSLR

DateFirmActionFromTo
Nov 2020Morgan StanleyDowngradesEqual-WeightUnderweight
Oct 2020JP MorganDowngradesOverweightNeutral
Oct 2020Raymond JamesMaintainsOutperform

View More Analyst Ratings for FSLR
View the Latest Analyst Ratings

 

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