3 ways to invest in nuclear energy

Nowadays, there is a lot of private funding being provided for nuclear fusion; in this article we analyze how the retail investor can follow the trend of nuclear fusion.

Nuclear fusion technology is an extremely current topic in the energy sector. Despite being the result of a physical experiment in the 1950s, it has always aroused fascination and bedeviled scientists. The basic concept is really simple: from a relatively minimal fuel, almost unlimited energy can be obtained. However, as is often the case, it is easier said than done.

Although nuclear fusion machines exist, it is not yet clear to us how to make them produce more energy than they use themselves to operate.

Thanks to a renewed global focus on sustainable energy, there are at least 35 nuclear fusion companies around the world that have secured more than $2.3 billion in private funding collectively. Well-known Big Tech names such as Jeff Bezos, who participated in General Fusion, and Bill Gates, who invested in Commonwealth Fusion Systems, have backed these companies.

How to invest in nuclear fusion

Most of the companies investigating nuclear fusion are optimistic that functional and productive reactors can be built within the next two years. However, the majority think that no earlier than 2030 will be the commercialization of nuclear fusion energy.

None of the more than 35 companies are public, and the IPO is not expected for several years, as the companies continue to work on proof-of-concept. Reason why, for the retail investor to invest directly in nuclear fusion is not possible.

However, we decided to show you two avenues in which one might interface with nuclear fusion despite the fact that all the companies are private. Investing in such a young field is as treacherous as it is risky.

1. Investing in the materials needed for nuclear power

Nuclear fusion needs fuel to do its work. Typically, uranium or plutonium are the materials that nuclear power uses, whose atoms are split to create a huge amount of energy. Nuclear fusion, on the other hand, uses more readily available fuels such as deuterium and lithium.

We may not yet be able to invest directly in the fusion industry, but we can certainly invest in companies that produce lithium. Companies such as Albemarle Corporation (NYSE: ALB) e Livent (NYSE: LTHM) are companies that produce lithium and could easily get rich if nuclear fusion takes off in the next decade.

2. Investing in reactor manufacturers

In addition to fuel, nuclear fusion needs nuclear reactors, very expensive machines, to be built, maintained and repaired. Public companies such as Babcock International (LON: BAB) e SNC-Lavalin (TSE: SNC) have subsidiaries participating in the creation of nuclear fusion technology. Although their exposure to the industry is still relatively limited, it could pave the way for the involvement of larger manufacturers in the future.

3. Investing in energy-intensive giants

David Kirtley, CEO of the startup Helion, hypothesizes that the data center will be among the early adopters of nuclear technology. This makes sense because data centers require huge amounts of energy and are typically located far away in areas peripheral to cities (an important factor in siting a nuclear reactor) and already have infrastructure ready and built in order to accommodate new generators.

The promise of low-cost, high-power nuclear fusion could allow big data like Verizon (NYSE: VE) o Amazon (NASDAQ: AMZN) to increase cost efficiency and, consequently, revenue.