Sam Dickie: Fisher Funds expert on nuclear energy's role in the future

Nuclear energy is experiencing a resurgence in interest amid concern surrounding shortages.

Its greenhouse gas emissions are smaller than most - and  reactors produce reliable baseline electricity cheaply and efficiently.

Fisher Funds expert Sam Dickie unpacks whether nuclear energy can have a future in New Zealand.

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Episode Transcript

Speaker 1 (00:00):
Nuclear energy is in the headlines recently is the US.
Nuclear energy is in the headlines as the US considers
its energy future, and support for nuclear energy is making
a bit of resurgence now, I no, it can be
an emotive topic. But of course energy demand is rising,
not least driven by the rising demands of energy hungry
data centers, the likes of AI and cryptocurrency, and we

(00:21):
need clean energy sources. Some say that nuclear fits that.
Bill sam Decky from Fisher Funds is with us for
more on this, Gilda, Sam, oh, sorry, we'll last you there.
So talk to us a little bit about nuclear energy
and remind us about nuclear energy demand today compared to
the past and the future.

Speaker 2 (00:44):
Yes, I's think a hot topic, Jack. And if you
look at total US electricity demand, the really interesting thing
is it's been basically flat in the US for fifteen
to twenty years. So demand growth of households has been
basically entirely offset by declining demand from industry as the
US is moved manufacturing offshore historically called as we know offshoring. However,

(01:08):
depending on which forecast, do you believe after decades of
that flat demand, demand growth is going to be about
five percent per annum for the next five to ten years,
which is a huge shift. And why is that? It's threefold? Ready,
The first is a ramp up in these you see
extremely energy hungry data centers as we store and utilize
tons and tons more data. The second thing is the
trend towards on shoring. So how's that for a full circle?

(01:30):
Is the US moves manufacturing back on shore. And the
third thing is of course longer term, as we electrify everything.

Speaker 1 (01:38):
So Sam, what is actually happening with these big deals
that are being struck?

Speaker 2 (01:44):
Yeah, So, I mean, just to give you some context
on the US energy mix today and when nuclear fits
in US electricity, that flat demand we've talked about, and
therefore that there's been no need to develop any more
generation plants of any type is about sixty percent fossil fuels,
twenty percent renewables, and twenty percent nuclear. And nuclear has
been shrinking for thirty to forty years. So you might

(02:06):
recall the three Mile Island debarcle in nineteen seventy nine
with a small amount of radioactive material release in an
accident in Pennsylvania. And because of that, the number of
nuclear reactors in the US has been shrinking for decades,
from about one hundred and fifteen to ninety four today,
and right now there's been some mega deal struck. So

(02:26):
on the back of this pick up and demand, we've
seen the fact there's been no supply of electricity for
decades or no increase in supply, plus government subsidizen tax
cuts have seen the constructional the reramping of existing nuclear
plants begin in earnest and Microsoft just signed a big
deal with Constellation Energy to bring some of the three
mile island for some of these back on stream. So

(02:47):
another full circle. And soon after that Metas said they
are looking at signing super long term power contracts with
nuclear plants to power the data centers.

Speaker 1 (02:56):
So talk to us a little bit about the perceived
or actual pros and of using nuclear as an energy source.

Speaker 2 (03:04):
Definitely stumbling into a lively in the motive debate here
lively in the motive for good reason, Jack. But the
pros are and there's a fairly well recognized is it's
considered a clean energy source, so zero carbon emission during operation.
But the second thing is nuclear plants run at about
ninety two percent capacity utilization, which is key because we

(03:24):
know that wind farms run it more like thirty percent,
and solar farms more like twenty to twenty five percent,
and even gas is in the middle. And the other
thing is these plants last for sixty to eighty years.
So that's the pros the cons. While it does generate
clean electricity, dealing with spent nuclear fuel as an ongoing
problem now about thirty percent of out as a recycle today,

(03:46):
but obviously seventy percent it needs to be dealt with.
The second thing that the plants are very, very expensive.
They take years to build, and because the industry has
been shrinking in the US, growing like a weed in China,
by the way, but shrinking in the US, the skill
sets are just not there to develop these plants.

Speaker 1 (04:03):
Interesting.

Speaker 2 (04:04):
And then of course you have the risk, even though
it's very rare of a catastrophic spill or accident.

Speaker 1 (04:10):
Yes, I mean and that is it is a risk,
But honestly, you don't need to convince me, especially for
the energy transition. I mean, you know, if you think
nuclear energy presents a health risk, wait till you hear
about coal fired plants. So what does all of this
mean for investors then?

Speaker 2 (04:27):
Well, I mean there's been some pretty interesting moves going on.
In the back of it. Some of these energy suppliers
like Constellation Energy you have been mopping up some of
these nuclear plants have been on fire, and the uranium price,
which of course is the fuel source for nuclear reactors,
has jumped from a price of around twenty bucks a
pound a couple of years ago to a peak of
one hundred and ten dollars earlier this year. But I

(04:49):
guess more broadly, it's a reminder that we're lucky in
New Zealand to have such a bun and clean hydro energy,
and not to mention we don't have a such a
spike in demand from data centers and resturing and manufacturing
interrupts it the a cup. But I think more broadly
globally that it's going to these new demand sources are
going to drive some really interesting decisions. So it's one
to watch. And I'm not saying we should watch what

(05:09):
China's doing, but but China is absolutely full steam ahead here.
Fifty five reactors today are wamping, twenty three under construction
and as well over another one hundred reactors under broad
long term consideration.

Speaker 1 (05:21):
Wow. Yeah, that's amazing. Thanks Sam. That's Sam Dickey from
Fisher Funds. In a couple of minutes on new stir
c'db where will take you to our correspondent from the
latest out of UK and Europe. Right now, it's fourteen
to seven.

Speaker 2 (05:32):
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