Did it really need a major war in its heartland to lay bare the pathetic lack of energy security across Western Europe?
As soon as Russia turned off the gas taps, major developed countries began a scramble for alternative energy supplies. Sanctions proved to be another own goal as Putin found a ready market for Russian energy in China and India.
You’d think politicians would have swallowed some humility pills and learned an important lesson. But, if you study the actions of the new UK government under its Secretary of State for Energy Security and Net Zero, Ed Miliband, you’ll struggle to see any signs of a new approach.
Licences for further oil exploration in the North Sea, recently awarded by the previous government, cancelled on his first day in office along with the nine year ban on onshore wind farms blighting our hillsides. Millions of pounds allocated by energy companies to use new technology to extract more undersea treasure wasted. Miliband refuses to allow access to mainland energy through fracking, and rejects the reality of fossil fuel dependence with these words at his recent party conference:
“This Labour government will break the power of the petrostates and dictators over our energy policy.”
In among solar panels, wind farms and turbines I was surprised to see one word that he did not expand on – nuclear. It’s a sign of the times we live in that a small band of vocal activists can sway public opinion on almost any topic. And boy have they given nuclear energy a bad rap. Maybe it’s a throwback to the use of nuclear weapons in 1945 or based on the small number of high profile failures at legacy nuclear power stations.
To forego nuclear energy on those grounds would be like refusing to fly on an aeroplane because you have a one in eleven million chance of being killed in a crash. While happily driving your car with a one in five thousand chance of a fatal accident.
The truth is that modern day nuclear plants are incredibly safe and their environmental impact in areas like waste disposal is well under control. They’ve been around for seven decades but the only country that has taken full advantage is France with 167 reactors operating out of 56 plants and providing a whopping 68% of the country’s electricity needs. Safely, for decades.
It’s clear that even ostrich politicians are starting to realise that the anti-nuclear lobby has led the world astray. As well as her disastrous policy on immigration, Angela Merkel committed a terrible crime against Germany by decommissioning its nuclear energy plants. These things can take decades to pass through planning, NIMBYist delays and eventual construction.
Thankfully, there is an alternative. Small Modula Reactors (SMRs) have been around for seventy yeas in submarines and aircraft carriers so the technology is well proven. As the name implies, they can be manufactured in parts that are quickly assembled on site so the decade long lead times can be confined to the wastebin of history.
Perhaps most important, they have a really small footprint so can be installed on the brownfield sites of disused coal powered plants as well as the recently decommissioned large scale nuclear reactors. For example a 440 megawatt SMR would produce enough electricity to power over a million homes and would require a site of just 25 acres. If Ed Miliband wants to generate that much power form solar he’d need 13,000 acres of land and he’d have to place a big order to his chums in China. Now that he’s lifted the ban on onshore wind farms he could always look to generate the same amount of energy from that technology – all he’d need is 32,000 acres of land going spare. That sounds like a small county to me…
And, of course solar only works when the sun shines. If you’ve spent much time in Britain this year you’ll know what a scarce commodity that is. You can rely more on fierce winds, but not on a 24/7 basis for 365 days a year.
Is there an investment opportunity here? Yes, in the public markets. I own shares in YellowCake which simply buys and holds the uranium on which nuclear plants depend. The world is currently using more uranium than it produces so there should be upward pressure on prices for a few years yet. The other interesting play on this emerging sector is Rolls Royce, now in its seventh generation of SMR manufacture. They are seen as a key provider of modern SMRs and have spun this technology off into a separate division, presumably with a plan to IPO at some point. So you can either buy into the wider company today or wait for the SMR listing for a pure play.
The answer to going green and achieving net zero has been staring us in the face since the 1950s. I know that politicians can be a bit slow on the uptake, but maybe SMRs will be the catalyst for a long overdue boom in the nuclear energy sector.
Until next time.
Graham