Investing.com – Nuclear energy in the US is poised for significant growth, and the future of this industry is expected to have two main drivers: the development of domestic production capacity and the localization of supplies of enriched uranium.
According to Daiwa Capital Markets, these changes could unlock billions in recent markets while changing the energy landscape.
Nuclear equipment
Daiwa explained in its research note to clients that the US Department of Energy (DOE) aims to add 35 gigawatts (GW) of recent nuclear capacity by 2035, an raise of 36% from 2023 levels. It says that this is part of the broader goal of tripling productivity by 2050 announced at COP29.
The company notes that achieving this milestone would require an additional 15 GW per year from 2040, which would contribute to achieving net zero emissions targets. Daiwa estimates this growth trajectory opens up a $101 billion market for nuclear power equipment makers.
Daiwa believes in a “long-term growth narrative [is] confirmed with [the] The US plans to increase capacity by 35 GW by 2035; a $101 billion market will be unlocked.”
They add that companies like GEV, BWXT and Fluor (NYSE:) could benefit, given an estimated cost of capital of $6,041 per kilowatt.
Enriched uranium
The company notes that Russia’s recent ban on exports of enriched uranium to the U.S. has intensified efforts to locate supplies of nuclear fuel.
Russia is said to currently account for 44% of the world’s uranium enrichment capacity. The U.S. ban on Russian uranium introduced in May leaves a 27% shortfall in domestic demand for enriched uranium.
Daiwa expects the domestic fortifiers market to be worth $443 million, highlighting companies such as Energy Center (NYSE:) and Honeywell (NASDAQ:) as beneficiaries.
While uranium oxide (U3O8) stocks remain solid and meet demand for 2.9 years, “Locating the nuclear fuel is probably the priority right now,” Daiwa said. In the near term, the raise in enrichment is likely to outweigh the benefits to miners.
Daiwa sees the U.S. nuclear resurgence as part of a global trend, with similar optimism about China’s nuclear ambitions, signaling solid prospects for the sector.
