Nuclear: A Thematic Investment with Long Term Fundamentals

Nuclear energy is one of the most interesting long term industrial investment opportunities in the world, and the interesting opportunity (in my opinion) is the enormous supply chain that has to exist around it.

Nuclear facilities don't operate in isolation. They require engineering, manufacturing, maintenance, instrumentation, radiation protection, testing, monitoring, waste management, decommissioning, health, security, training and thousands of other products / services needed to support their massive operations. Importantly, much of that demand continues for decades after a reactor is commissioned.

The numbers are difficult to ignore. More than 40 countries now support expanding nuclear power, while the IEA estimates annual nuclear investment could be $100+ billion by 2030 under its announced pledges scenario. Public perception and nationally held views are changing. Italy has turned toward nuclear in the last month, other European bans have been lifted, while existing plants are also having their operating lives extended, meaning this isn't simply a bet on new construction. Even some of the Green / Environmental parties around the world have slowly accepted Nuclear is an inevitable part of the long term clean energy mix.

Then there is fusion.

Nobody knows exactly when fusion becomes a commercially significant source of energy but there are now circa 80 private companies working to make that happen as soon as possible. When fusion is finally connected to the grid, I don't think the nuclear supply chain simply disappears. I think it shifts. A substantial part of the skills, companies, infrastructure, regulatory experience and safety culture being built and maintained for fission today should have relevance to the next generation of nuclear technology.

The technology may change but underlying demand doesn't.

The world needs electricity and heat.

Data centres need enormous quantities of reliable power. Even if they decrease with model efficiency those requirements are not going away, and nuclear is one of the relatively small number of technologies capable of providing large quantities of dependable power and heat around the clock. The IEA is already pointing to rapidly increasing electricity demand, including from data centres and AI, as one of the forces behind renewed nuclear investment.

For Color Tech Holdings this makes investing in next generation safety technology very interesting.

Safety isn't a fashionable layer sitting on top of the nuclear industry. It is fundamental to whether the industry can operate at all. Every reactor generation may be different, but the requirement to protect workers, understand hazards, monitor facilities and demonstrate that operations are safe doesn't disappear because the technology improves.

We are obviously a very small part of a very large industry, but I like where we sit within it. We make relatively simple but important products that help people identify hazards quickly and reduce their impacts, in an industry where the consequences of not knowing can be significant.

We aren't trying to predict which reactor designs win.

Fission grows, we have a market. Existing plants operate for another 20, 40 or 60 years, we have a market. Decommissioning increases, we have a market. The nuclear supply chain expands, we have a market. Fusion eventually becomes commercially viable, the underlying requirement for safety and hazard detection remains.

There aren't many industries where you can reasonably look several decades ahead and say that the fundamental human need driving demand is unlikely to disappear.

People will always need power and heat.

Nuclear technology will evolve considerably in the decades ahead and we are excited to be a part of the supply chain that evolves with it.

Safety will remain the cornerstone and we need more businesses investing in it because it is a key enabler of the industry.

That, to me, is the longevity play.

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Image: Eric Evenson / U.S. Geological Survey