Investing in nuclear energy infrastructure can create jobs and drive economic growth, but it has similarly negative implications.
Jack Shaw, author and editor of Modded, explores the advantages and disadvantages of investing in nuclear energy infrastructure.
A clean electricity market is primarily an economic benefit rather than an environmental benefit. As these markets mature, private investors and large organisations should consider what the niche deserves special attention. Nuclear power is a potential option.
Nuclear power often takes the backseat to renewable energy in a sustainable energy conversation. Still, it does not produce operational greenhouse gas emissions and is not intermittent like the wind or the sun. As a result, it could be a promising investment in sustainability and economics. However, stakeholders should consider the big picture before making a decision.
The positive economic impact of nuclear investment
Like many alternative power sources, investment in nuclear energy infrastructure can create many positive economic impacts. Here are some notable things to note:
Diversity in the Energy Market
Funding Nuclear Power diversifies the industry, and diverse markets usually promote strong long-term performance. Low carbon energy is already a powerful market, generating £69.4 billion in 2022 alone. This is a 28% growth from the previous year.
Generation is both the fastest and largest part of this segment. Promoting diversity within that niche could drive even greater economic growth. This diversification is particularly influential as nuclear power has a unique selling point compared to renewables.
Nuclear facilities can produce electricity around clocks and without geographical restrictions. As a result, it fills the gap between the performance that wind and sunlight naturally create. Investing in this solution could result in a more robust and healthy clean power market.
High tax revenue
The nuclear sector is also an important source of central government funding. With a significant tax on electricity generation, the growing industry means additional revenues to support a variety of public projects. Although it is not as prominent as renewable energy sources, nuclear power is already generating significant tax revenues.
A 2023 survey found that the nuclear industry mainly contributed about £7.1 billion in UK taxes, which are located in the northwest. Expanding this sector could lead to government funding even higher, both from taxation on power generation and income taxes from the resulting employment.
These taxes could drive economic growth in other sectors and provide the necessary support to lower and middle class families. In that way, investment in nuclear power will fund a healthier economy as a whole.
Job creation
Another advantage of supporting nuclear power is that it creates jobs. Specialized nuclear energy infrastructures need to grow to increase the electrical generation capacity of fuels. Expansion within the industry could create jobs in both operating these facilities and building them.
The government’s current goal of generating 24GW of nuclear power by 2050 would create an estimated 80,000 additional jobs across the UK. Many of these roles are also skilled positions. Because working at a nuclear power plant requires specialized training, positions often pay a significant wage compared to employment in other energy sectors.
It is also worth considering that rural areas are often the most affected by this growth. In such places, employment growth and wages are often lower, but the introduction of additional nuclear infrastructure could potentially provide the required employment opportunities and increased pay.
Niche Application Development
It also has the potential to derive value from niche markets within the nuclear industry. Nuclear power is a unique source of electricity, thanks to its period of time that it can generate energy from a limited amount of fuel. As a result, it can support some applications where alternatives do not fit well. This is a profitable investment.
Military use cases are typical examples. Some naval vessels use miniature reactors to power over long voyages, and such possibilities are useful in many other similar applications. Considering that the military power supply market is already well worth $20 billion by 2032, this segment could prove a valuable long-term investment.
Remote projects and heavy industrial use cases could also garner much from increased nuclear energy funding. Early participants in these niche markets may see impressive returns in the future.
Negative economic impacts of nuclear energy
Nuclear energy infrastructure has many positive economic implications, but it also introduces several challenges. Organizations and individuals need to recognize these shortcomings before funding this market.
High capital costs
Nuclear power can be beneficial in the long term, but it will cost you a prepayment fee. Building the necessary infrastructure requires a large amount of money and can slow economic growth compared to other investment targets.
Construction of nuclear power plants is a long and challenging process with general lead time delays and budgetary issues. In fact, nuclear reactors have the most frequent and severe cost overruns of any electrical infrastructure. 97% of nuclear projects surveyed encountered such problems.
Once finished, the reactor is evenly uniform due to relatively low fuel costs, and ultimately generates profits. However, the initial spending required to reach that point may discourage some investors, especially if the money can go to a project that will instead speed up turnaround time.
High operating costs
Nuclear fuel costs are low, but this is only a portion of the operating expenses required to operate the reactor. It also costs money to maintain nuclear energy infrastructure. Even as profitability increases, margins are not as high as some options.
Operation and maintenance account for approximately 66% of the total operating costs of today’s nuclear facilities. Much of this comes from the sophisticated technology of nuclear reactors (which require specialist care to be implemented and repaired) and high cooling demands.
It is noteworthy that such costs have been reduced with newer, more efficient facilities. However, a relatively low profit margin means a long way to positive returns on investments.
Take away investment from renewable energy
Nuclear energy operations and capital costs are even more worrying when considered in light of the overall low-carbon electricity market. Investing in nuclear reactor infrastructure is a decision not to invest in alternatives like renewable energy. This relative drop in the funds of competitors can raise concerns as the world is passing through time to combat climate change.
Renewables may be intermittent, but they reach profitability much faster than the nuke and with less upfront spending. As a result, some argue that wind and solar should be the main funding focus to accelerate their shift from fossil fuels. Nuclear energy is also sustainable, but even if investments are added, it will take time to roll out.
Of course, the transition to green power requires multiple types of electric power generation to meet the various needs. Atomic reactors may play a role in this diversity, but their long lead times and high costs can lead to less valuable investments in the short term.
Nuclear power offers a complex economic outlook
In light of all these positives and negatives, nuclear power is facing an uncertain economic future. Funding this infrastructure creates jobs and strengthens the economy, but it takes time to reward financial and environmental benefits.
Overall, nuclear energy infrastructure is a promising and important investment opportunity in the long term, but it may not be an ideal focus for everyone. For at least for now, it could be a profitable portion of the overall, but it is not a major factor in economic growth in the electricity sector.
Source link
