Advanced Nuclear Energy Systems Are Ready for Investors Who Seek Ground Floor Opportunities
- Mar 1, 2018 1:01 pm GMT
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Last week, the Nuclear Infrastructure Council hosted its 5th annual Advanced Reactor Technical Summit. The agenda was packed; information and ideas came rapidly enough to inspire significant post-event reflection. One question worth of significant additional discussion is “How do we match the ingenuity and enthusiasm of atomic innovators with the large magnitude financing sources needed to advance the field so it can become a major success story?”
Several of the Summit’s former primary participants have dropped out of the field or are realigning their efforts; financing became either a solid barrier or a hindering hurdle needing to be better addressed. Several new entrants made their debut. Stalwarts who have been a part of the summit for several years, including some who have been at every meeting so far, provided status updates with significant progress to report.
Though there are still no commercial reactors designed in the past 30 years operating in the United States, the field is maturing and ripe for investors willing to side-step conventional wisdom so that they can be in at the ground floor. In my opinion, the foundation and basement level investors have completed enough of their tasks to declare that the remainder of the structure is ready for construction.
There’s no doubt that many risks remain to be retired before investing in advanced nuclear systems is appropriate for widows, orphans or near term retirement funds. For those with a greater appetite for risk or who understand the importance of long term, patient investing, there are some impressive opportunities available. The identified, addressable markets are enormous while the universe of potential suppliers is rather compact.
Virtually all of the currently participating companies, however, are either small, not-yet-public start-ups only accessible to investors of a certain sophistication or wealth or they are very large companies with modest levels of involvement in advanced nuclear compared to their overall size.
That reality makes it difficult for people with modest resources but significant professional understanding of the opportunities to make strategic, long term, focused investments in the field.
During several of the breaks throughout the course of the event, I engaged in a thoughtful conversation with Dr. Warren (Pete) Miller, a former head of the Office of Nuclear Energy at the Department of Energy. Though neither of us are financial experts, we agreed that it is probably time for advanced nuclear energy advocates to attract the attention of people who specialize in aggregating small investors into large, focused funds.
Though the specific form of the fund(s) need a lot of creative development, there is an opportunity to put together investment vehicles similar to exchange traded funds (ETF) that specialize in identifying and investing in high potential nuclear energy developers. Such funds could spread the execution risk among several different projects and among several different phases of the supply chain. With careful communications, the fund managers can develop the kind of patient money needed for success in this field by making it abundantly clear to participants that they need to be willing to wait for 5-15 years before seeing strong results from selected investment targets.
Conventional wisdom assumes that kind of patient investor doesn’t exist anymore, but that wisdom is belied by the fact that parents and their children still cooperate in developing plans to invest in lengthy, costly college degree programs or such long-term investments as medical school. Major energy corporations still develop capital intensive projects that often need a decade or more of ever-increasing expenditures before they begin to generate any revenue at all.
Successful people, including nuclear professionals, still make long term investments, save for retirement, and enter into financial agreements that might last for thirty years or more.
Of course, many sources agree that the “puck” in the energy investing world is currently heading towards an ever increasing penetration for natural gas and its renewable energy partners. People who believe that straight line trajectory will continue without deflection are all skating in a certain direction, sure that they are following The Great One’s advice to move to where the puck is going to be.
It takes confident, informed and observant participants to see that there are discontinuities in the ice and numerous opportunities for other players to change the puck’s current trajectory. It is always possible that the crowd is absolutely correct in its prediction of the future location of beneficial investing in energy. Time will tell, but by the time it does, the crowd may have seriously misjudged the best place to make strategic investments.
Smart investors looking to separate their strategy and seek less crowded, potentially more lucrative targets would be well advised to learn more about the scale and breadth of the new (or renewed) ideas in nuclear energy.
In the very near future, I will add more specifics about the opportunities revealed during the Advance Reactor Technical Summit. In the meantime, I’d be interested in hearing from anyone with thoughts about developing mechanisms for investors with moderate resources and long time horizons to focus part of their portfolio in this potentially high payoff field.
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