March 20, 2017 by John Lee, CFA (

I have owned shares of uranium mining companies in the past, anticipating the inevitable rebound of nuclear energy following the Fukushima nuclear plant accident.

3444753 / Pixabay

However, through my recent research into the renewable energy sector and vanadium batteries, I became bearish on nuclear energy and sold my shares in Energy Fuel Inc. (TSX: EFR) and Fission Uranium Corp. (TSX: FCU) in February 2017.

Why? In this article, I will discuss:

1. The state of the big four nuclear power houses (Westinghouse, Toshiba, Areva and EDF), and the rising costs and long delays associated with nuclear power plant construction;

2. The case for uranium bulls;

3. The Nuclear Power Generating Capacity Growth Forecasts by 2030 issued by the International Atomic Energy Agency (IAEA) which, over the years, turned me into a uranium bear;

4. The rapidly decreasing cost of renewable energy and its deployment on a worldwide scale as the green energy of choice; and

5. The emergence of utility-scale batteries that improve the availability factor of wind and solar power to serve as base load energy.

1. The rising costs and long delays associated with nuclear power plant construction

I shall start by quoting a Financial Times article dated February 16, 2017 by Ed Crooks and Kana Inagaki, titled “Toshiba brought to its knees by two US nuclear plants”:

“Westinghouse, Toshiba’s US-based nuclear engineering subsidiary, is building at Vogtle two of its new AP1000 reactors, a “generation III plus” design that was intended to be the flagship of its expansion into markets around the world. Two more are being built about a hundred miles away in South Carolina at a plant called VC Summer….The projects are already more than three years behind schedule and, on a combined basis, more than $10bn over their original budgets. This week the timetable for the Summer project was pushed back again, and there were warnings that construction at Vogtle could also slip further.

… The contracts for the new reactors were signed in 2008 by the plants’ owners, led by Southern Company for Vogtle, and Scana for Summer….

Scana said on Tuesday that it now expected the first new reactor at Summer to be in service in 2020, not 2019 as it had previously planned.

At Vogtle, the plan to start the first new reactor in 2019 looks ‘extremely challenging’, Mr Jacobs and Mr Roetger (Georgia Public Service Commission) warned on Monday, as a result of a ‘lack of construction progress’ since their previous report last August.

If construction continues to fall behind schedule, Westinghouse’s losses on the two contracts could grow even larger.

[Gregory Jaczko, who was chairman in 2009-12 of the Nuclear Regulatory Commission] says the problems of Vogtle and Summer have probably stopped any new nuclear development in the US for a generation.

‘These projects are killing construction, because nobody can finance new reactors,’ he says. ‘It may be 20 or 30 years before investors will be interested again.’”1

1 E. Crooks & K. Inagaki, “Toshiba brought to its knees by two US nuclear plants” (February 16, 2017) Financial Times.

A month later, according to the Asia Nikkei article dated March 11, 2017, titled “Toshiba scrambles to stem further bleeding from Westinghouse”:

“Toshiba is considering having subsidiary Westinghouse Electric file for Chapter 11 bankruptcy protection to limit liability for future cost overruns on long-delayed U.S. nuclear projects. Yet loan guarantees and potential compensation claims could still prove costly if progress remains slow.

Cutting losses

Westinghouse signed fixed-price agreements in the fall of 2015 for two ongoing nuclear power projects in the U.S. The power companies operating the plants agreed to pay more for construction work in exchange for the Toshiba unit covering any additional costs.

Less than a year and a half later, Toshiba announced an estimated 712.5 billion yen ($6.18 billion) impairment loss on its American nuclear operations for the nine months through December, stemming from sluggish demand and soaring costs to comply with higher safety standards. Liabilities will likely exceed assets by 150 billion yen when the company closes its books for the fiscal year this month.

…U.S. government guarantees on $8.3 billion in loans for one project in Georgia. If Westinghouse cannot finish the job, repayment of these loans will likely be delayed, in which case the government would take on the debt.

It remains unclear how Washington and Toshiba would split the costs in this case. But the possibility that American taxpayers could bear some of the burden has spurred negotiations involving the U.S. and Japanese governments to settle the matter.”

Toshiba is reported to exit the nuclear power business in an article dated January 29 2017, at titled

“Toshiba to withdraw from nuclear plant construction”:

“The company’s decision to cease taking orders effectively marks its withdrawal from the nuclear energy business. It also apparently ends the so-called nuclear renaissance in the U.S. for full size reactors.

During 2007-2010 there were more than two dozen applications expected for new reactors, but now only a few licenses that have been completed and they do not have any links to near term plans to build the units.”2

2 D. Yurman, “Toshiba to withdraw from nuclear plant construction” (January 29, 2017) Neutron Bytes.

Almost half of the reactors in the United States have been operating for 40 years or more and are nearing retirement. Yet the four AP1000 reactors are the only ones under construction.3

3 “United States of America.” Power Reactor Information System (PRIS), International Atomic Energy Agency (IAEA), 14 March 2017.

I believe that nuclear power is certain to continue its downward slide in the US for the reasons I will explain.

How about EDF and Areva, two of the remaining global nuclear industry giants?

According to an article by Mycle Schneider posted at dated April 14, 2016, titled “Asahi WebRonza (Japan): After the Paris-Agreement: Corporate Meltdown in the Nuclear Industry”:

“Launched as a response to the Chernobyl accident, at the brink of the 30th anniversary of the disaster in Ukraine, not a single so-called Generation-III+ EPR reactor is generating power anywhere in the world.

    In the meantime, the self-proclaimed ‘global leader in nuclear energy,’ the French state-controlled AREVA, went bankrupt. After a cumulate loss of €10 billion ($11.4 billion) over the past five years, significantly exceeding its peak annual turnover, and a debt load of €6 billion ($6.8 billion), the company will be taken apart. Its share value has eroded by 95 percent over the past eight years—a plunge exceeding TEPCO’s fall after the Fukushima crisis hit the company and prior to its de-facto nationalization—hitting a new historic low on February 19, 2016. The government’s rescue strategy—injecting €5 billion and forcing EDF to absorb AREVA’s reactor business—is in-turn increasing the risk for EDF. Another significant barrier for the conclusion of the rescue deal remains the multibillion-euro liability of the Hinkley Point predecessor projects in Olkiluoto, Finland, and Flamanville, France. The EPR construction in Finland started over ten years ago. The plant was to begin generating carbon-free electricity

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