Temporary downturn in nuclear energy investment

It seems like a surprising development, and I happen to think that it is surprising, just like a cool year is "surprising" when the world is inexorably warming. The surprise is that nuclear energy investment was down in the first quarter of 2010 and the fourth quarter of 2009. I think the aberration may have been due to the increased investment activity prior to that. Given what HAS to happen with nuclear power, I'm pretty sure that this was a temporary situation, not indicative of a long-term trend, and the analysts appear to agree with me.

So we'll cover this with two articles:


Research and Markets: Nuclear Energy Quarterly Deals Analysis: M&A and Investments Trends - Q1 2010

New Investments In The Nuclear Energy Industry Declined By 39% In Q1 2010

Investments in nuclear energy companies, including new investments through equity/debt offerings and financings by PE/VC firms reported a decrease of 39% in deal value and 61% in the number of deals, reporting 49 deals worth $11.4 billion in Q1 2010 compared to 126 deals worth $18.7 billion in Q4 2009. A relatively tight financial market, coupled with certain nuclear energy companies poor stock performance and a high risk in terms of return on investments in the capital intensive nuclear projects, are affecting the total new investments in the market.

GlobalData expects that the clean energy theme will certainly see new investments in the nuclear energy market, as nuclear power is capable of reducing carbon emissions when compared to traditional coal or gas fired power plants.

According to Uma Bhanu Kondury, Analyst at GlobalData, Although nuclear power enjoys the benefit of low carbon emitting technology, the higher risks involved in undertaking nuclear power projects during times of financial crisis have had a significant impact on investments in the sector.

Decreased Investments In The Nuclear Energy Market In Fourth Quarter [of 2009]

Global investments in the nuclear energy industry witnessed a decrease of 5%, reporting $145.7 billion in 2009 compared to $152.9 billion in 2008. The difficulty in raising finance, start-up expenses, coupled with the global economic downturn led to an overall investment decline in 2009. However, the number of deals increased from 724 deals in 2008 to 822 deals in 2009.

GlobalData expects that the nuclear energy market will mark its strong presence in the immediate future because the WNA energy index, which provides information on global nuclear energy industry prospects, registered positive signs in Q4 2009, which will certainly boost the investments. Further, many new reactors projects are in progress in the US, the UK and other established nuclear countries.

However, in the coming three to five years, Asia will likely to dominate new reactor construction, led by China and India, because around 18 reactors were under construction by the end of 2009 in China; and to follow, India also signed a nuclear cooperation agreement with more countries and awarded reactor contracts to four foreign vendors in 2009.

So I still think (and my connections make me think so more) that nuclear energy is still going to be a major growth industry; the Gulf oil spill just makes that even more sensible.