Investment in Nuclear Power

Is investment in nuclear power going be profitable considering the damage to Japanese nuclear facilities following the historic earthquake and tsunami? For Japan investment in nuclear power has been a necessity as the country is an industrial and manufacturing powerhouse and must import all of its fossil fuels. For those asking what is a good investment in the 21st century, nuclear power seemed to be near the top of the list as the specter of depleted oil reserves raises its head. Risk versus reward has always been the question in the use of nuclear fuels and investment in nuclear power. How does this play out in the aftermath of damage to several nuclear plants in Japan? The fifteenth largest nuclear plant in the world, Fukeshima Dai-ichi, was put online in 1971 and drove electrical generators producing 4.7 gigawatts. Engineers at the plant are now racing against time to salvage the plant and its nuclear core. According to press reports the chances of a nuclear meltdown are receding but whether or not the plant will ever become operational again is questionable.

For those interested in investment in nuclear power we might ask which companies would be affected by reduced investment in nuclear power. The reactors at Fukeshima Dai-ichi, which means Fukeshima number one, were designed by General Electric who built reactors 1, 2, and 6. Numbers 3 and 5 were built by Toshiba and number 4 by Hitachi. Ebasco carried out the architectural design and plant construction was by Kajima. The plant was originally planned to shut down in 2011 after 40 years of operation but was granted a ten year extension by regulators just a month before it was damaged by the tsunami. When asking what are safe investments, one needs to look at who is involved in building and operating nuclear plants, supplying the fuel, and the like. In 2007 General Electric and its Japanese technology licensees, Toshiba and Hitachi, formed Global Nuclear Fuel of which GE is the majority partner. This company, and by extension its owners, will be affected over the long term by events in Japan today.

Nuclear energy today provides a sixth of the world’s electricity and, as the nuclear power industry likes to remind us, reduces the global emissions of carbon dioxide by 2.5 billion tons a year that would be generated by coal fired plants. Nuclear power is not going to go away but investment in nuclear power will require a little homework and attention to ongoing events. For example, Japan needs to generate electricity to compete as a major industrial power. It needs a stable power source to keep production in the homeland and not outsource. Those who would like to invest in Japan in the aftermath of the worst earthquake and tsunami in its history will want to keep tabs the nuclear issue as well. Japan’s investment in nuclear power going forward will likely contain many more safeguards than Fukeshima Dai-ichi and the other plants had and, probably, at a higher cost.

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