You know Your Survival Guy is a proponent of diversification in investment portfolios. Harry Markowitz called it the “only free lunch in investing.” The reason is that diversification reduces volatility and creates stability. You can see the effects on Markowitz’s Efficient Frontier.
But diversification can add stability in other areas, too. At RealClearEnergy, Brian Gitt explains that a diversified plan for nuclear fuel sourcing can add stability to America’s power sector as the nuclear renaissance adds new generation to the grid. He writes:
Advanced nuclear fuel differs from traditional fuel, which is typically enriched less than 5% and shaped into small oxide pellets. Advanced fuel has a higher enrichment level or a different form factor. It is more energy dense and efficient, but its supply chain is just beginning to grow.
There are three sources of advanced fuel: fresh fuel made from newly mined uranium, government-sourced material, and fuel recycled from nuclear waste. Using them together can reduce supply risk, control costs, and help scale advanced nuclear power faster than any single source.
The biggest advantage of fresh fuel is certainty: the industry knows how to make and transport it, companies know how to buy it, and regulators know how to review the plants that use it. But certainty comes at a cost. Fresh fuel is two to three times more expensive than government-sourced material or recycled fuel.
The supply chain is still small, and each link requires plants, permits, workers, equipment, and transportation. If one link is behind schedule, the fuel arrives late, and if the fuel is late, the power is late. Suppliers lack the firm orders needed to build capacity, while developers hesitate to commit before projects are licensed and financed. Each side is waiting for the other to move first. Relying on fresh fuel alone would leave the industry exposed to high prices, market swings, trade restrictions, geopolitical disruptions, and delays.
Governments have nuclear material left over from defense, research, and energy programs. Some can be processed into advanced-reactor fuel without all the steps required to make fresh fuel. Governments spend billions to store, guard, or get rid of this material. Turning it into fuel converts a costly burden into affordable clean power.
The downside is that we lack facilities to downblend the material and fabricate it into the form reactors need. Agencies must decide who can use and transport it and under what terms, so the delivery date remains uncertain. Stockpiles are also finite. They can support early growth, but they can’t fuel a reactor fleet forever.
Recycled fuel is the strongest long-term option. When most people hear the term “nuclear waste,” they assume it has no value. But waste is used nuclear fuel, and most of today’s reactors use only about 5% of their fuel’s energy before it’s removed and placed in storage. That means 95% of the fuel’s original energy is left behind. Leaving it untapped is like taking one bite out of an apple and throwing away the rest.
Action Line: When you want to talk about diversification in your investment portfolio, email me at ejsmith@yoursurvivalguy.com. And read more about the nuclear renaissance by clicking on the links below.
