Investing.com -- U.S. nuclear power is poised for significant growth, with two major themes said to be driving the industry's future: expansion of domestic capacity and localization of enriched uranium supply.
According to Daiwa Capital Markets, these developments could unlock billions in new markets while reshaping the energy landscape.
Nuclear equipment
Daiwa explained in its research note to clients that the US Department of Energy (DOE) aims to add 35 gigawatts (GW) of new nuclear capacity by 2035, a 36% increase from 2023 levels. This is said to be part of a broader target to triple capacity by 2050, as announced during COP29.
The firm notes that achieving this milestone would require 15 GW of annual additions from 2040 onward, contributing to net-zero emissions goals. Daiwa estimates that this growth trajectory opens up a $101 billion market for nuclear power equipment manufacturers.
Daiwa believes the “long-term growth narrative [is] reaffirmed with [the] U.S. eyeing 35GW additional capacity by 2035; a USD101bn market to be unlocked.”
They add that companies such as GEV, BWXT, and Fluor (NYSE:FLR) are positioned to benefit, given the estimated capital cost of $6,041 per kilowatt.
Enriched uranium
The firm notes that a recent Russian counter-ban on enriched uranium exports to the US has intensified efforts to localize nuclear fuel supply.
Russia is said to currently account for 44% of global uranium enrichment capacity. The US ban on Russian uranium, enacted in May, leaves a 27% shortfall in enriched uranium demand domestically.
Daiwa expects a $443 million market for domestic enrichers, highlighting companies like Centrus Energy (NYSE:LEU) and Honeywell (NASDAQ:HON) as beneficiaries.
While inventories of uranium oxide (U3O8) remain robust, covering 2.9 years of demand, “Localisation of nuclear fuel is likely now a priority,” Daiwa said. Enrichment growth will likely outpace benefits to miners in the near term.
Daiwa sees the U.S. nuclear revival as part of a global trend, with similar optimism for China’s nuclear ambitions, signaling a robust outlook for the sector.