Big Banks Agree to Finance Nuclear

Fourteen of the world's largest banks and financial institutions, including Bank of America, Citi, Parabas, Morgan Stanley, Goldman Sachs and Abu Dhabi Commercial Bank, are pledging to increase their financial support and backing for nuclear energy. This announcement was made at an event held in New York City during Climate Week, in a long-awaited recognition by these financial institutions that the nuclear sector has a critical role to play in the transition to low-carbon energy and provided direct support of COP28's pledged goal of a global tripling of nuclear power.

The announcement occurred at a gathering in the Rockefeller Center, which brought together heads of state, ministers, and top executives from the nuclear and finance sectors. John Podesta, White House climate policy adviser, introduced the sesion by saying, “Our mission is clear: to ensure nuclear energy plays its role in building a sustainable, secure future. If we work together, we can make nuclear a cornerstone of our climate strategy.”

The banks did not commit to any specific funding but their pledge is an acknowledgement that the availability of funding is critical in the transition to low-carbon energy. In particular, high financing costs have been an obstacle to the construction of new plants and lack of availability of funding interest contributed to the decline in new projects for most of the last four decades. with the majority of the world's reactors built in the 1970s and 1980s.

We believe that this new bank pledge is a reflection of the demand inflection point that nuclear is experiencing, with increasing customer interest demonstrating the value that nuclear has for both reliable energy and carbon-free energy. Banks are increasingly aware that, rather than being controversial, nuclear power is becoming increasingly popular, especially for those fully committed to decarbonization.

Bank of America has already begun to recommend nuclear investments for its clientel, having previously issued its "Nuclear Necessity" report. It will naturally follow, then, that BofA and other banks that have done their homework, will be willing to provide direct lending, project finance and investment banking support to utilities and other nuclear companies looking to deploy new nuclear generation.

This announcement should help to shift attitudes at other international and multilateral agencies, such as the World Bank and IMF, which still do not provide any finance to nuclear projects. What is becoming increasingly clear is that there is virtually no scenario in which the world can achieve carbon neutrality by 2050 without nuclear power, according to the UN’s Intergovernmental Panel on Climate Change. These banks have heard that message and are ready to deal.

[Read more at the below sources.]

Sources

Financial Times, World’s biggest banks pledge support for nuclear power, by Lee Harris and Malcolm Moore, September 22, 2024

World Economic Forum, Center for Energy & Materials, World's biggest banks back nuclear power, and other top energy stories, Roberto Bocco, updated Oct. 9, 2024.

Environmental Energy Leader, 14 Major Banks Pledge Support to Triple Nuclear Capacity by 2050: Leading financial institutions unite to accelerate global nuclear energy expansion, September 24, 2024.

Published by Nucleation Capital in Asset manager support, Capital reallocation, Carbon emissions, Central bank support, Energy abundance, Energy transition, International support for nuclear, LINKS, Solving climate

November 16, 2023

Investors are turning bullish on nuclear

After years of disinterest, energy security concerns and the push for net zero are leading investors to bet on nuclear power. The fact that the world has not managed to meaningfully reduce emissions—despite commitments from most every country and billions spent on renewables—has made it clear that more dramatic action is needed.

Many of those trying to gauge investor interest look at spot Uranium prices, believing that these are a barometer for investor interest in nuclear. The fact that the spot price rose 55% between January and October speak loudly about the shifting sentiments and prospects for nuclear power.

According to Cameco's website, the world's largest publicly traded uranium company, “Ongoing geopolitical events coupled with the global focus on the climate crisis have created what we believe are transformative tailwinds for the nuclear power industry, from both a demand and supply perspective.” Not surprisingly, Uranium spot prices stood at $74.38 per pound at the end of October, based on month-end prices published by nuclear research companies UxC and TradeTech, up from just $18 in October 2016 and $47.68 at the end of 2022. According to Morningstar, nuclear related exchange traded funds were the best performing ETFs, with Sprott Uraniaum Miners ETF (URNM) gaining 13% over the summer.

Back in May, Bank of America’s Research Investment Committee (RIC) forecast a 20 to 40% upside on uranium and nuclear power after a decade of underinvestment. Bank of America published its research findings in a report called "The Nuclear Necessity" and pointed out that global demand for nuclear had grown with 60 new reactors being built, 100 more approved and plans for old reactors to be refurbished, adding to the positive investor sentiment.

The entire global economy is, in fact, poised to move into a new period of increased interest in building nuclear, premised upon macroeconomic forces that include "resource nationalism, energy security, war and inflation." According to Jared Woodard, Bank of America's Investment and ETF Strategist, "Every analyst I spoke to was bullish on prospects for nuclear power as a technology that's clean and meets the kinds of goals that so many policymakers are eager to hit in terms of reducing emissions."

Both sides of the political spectrum see the beneifts of nuclear, progressives like the low emissions and highly reliable capacity of nuclear for addressing climate change and conservatives like the national and energy security aspects. [Aside: What's been working in the U.S. Congress is that both Democrats and Republicans vote in support of bills that both protect existing and help next-generation nuclear power using voice votes. Pronuclear bills have been passed with bipartisan majorities in every administration since Barack Obama's, with the Biden Administration doing the most good to level the playing field for nuclear. Virtually every elected official supports nuclear but progressives still find it harder to explain their support to their constituents. Less so with Republicans.]

Read more at Reuters Investors are turning bullish on nuclear, by Paul Day, November 16, 2023.

Reuters, Best and Worst Performing ETFs in August, by Valerio Baselli, September 15, 2023.

Published by Nucleation Capital in Asset manager support, Capital reallocation, Carbon emissions, Climate policy, Corporate decarbonization, Energy abundance, International support for nuclear, Investor activity, LINKS, Nuclear competitiveness, Nuclear financing, Nuclear innovation, Private companies, Public companies, Solving climate, Zero emission energy

May 30, 2023

Bank of America: “The Nuclear Necessity”

Bank of America's Research Investment Committee issued a landmark report on May 9th to its securities clients entitled "The Nuclear Necessity," finding evidence of increasing demand and giving a bold "BUY" recommendation for nuclear and uranium. (Note: Initially, only a summary image of the top-line take-aways was shared on Twitter. More recently, BofA has chosen to share the report online.)

This report gave a bullish assessment of the nuclear power industry and its new growth prospects. (Note: Initially, a summary image of the top-line take-aways was shared on Twitter. More recently, BofA has chosen to share the report online.) The entire report is worth reviewing but there were two bullish catalysts not priced into the market in the analysts' opinion: 1) a potential G7 sanction on Russian uranium and 2) policy shifts towards nuclear "as the best climate solution."
We are very excited to see this analysis by a big bank and expect that many others will follow, as it has become clear that nuclear has hit an inflection point. We also believe there are several other very important catalysts not included in the BofA analysis. Reach out to us if you'd like to learn more about what we are seeing happening in the public markets and especially if you are intrigued to participate in the growing private markets. Nucleation provides investors with several unique vehicles which enable affordable access to the nascent but growing areas of deep tech innovation, expansion and improvement of collateral support, supply and integration services through our venture fund offerings.

References

Bank of America Securities/BofA Global Research: The RIC Report, The Nuclear Necessity, published May 8,2023.

Updated: October 2023

Published by Nucleation Capital in Asset manager support, Capital reallocation, Carbon emissions, Climate policy, Corporate decarbonization, Energy abundance, International support for nuclear, Investor activity, LINKS, Nuclear competitiveness, Nuclear financing, Nuclear innovation, Private companies, Public companies, Solving climate, Zero emission energy