Sunday, July 22, 2012

What the 15% Nuclear Power Target Could Mean to You

Alright, so a 15% target for nuclear power it is. So what? Well, if you’re a financial analyst doing utilities, you should put all the existing nuclear reactors on an Excel spreadsheet, do a few calculations using government assumptions to figure out total capacity, then begin retiring existing power plants until you reach that number. Those sitting on live fault lines are candidates for immediate decommissioning, while aging plants, particularly those with troubled histories, are also likely to be decommissioned when their current license expires. Oh, and prospects for the Fukushima Daini units being fired up again look dim. Do this exercise and you’ll have a working hypothesis on the impact that the write-downs and decommissioning costs will have on individual power companies. Match the results to their market performance, and you could have an investment strategy that is likely to make some money for you by the end of another couple of years, when we’ll know conclusively what is going to happen to the existing power plants as well as the ones under construction. In fact, I’m pretty sure you’re doing this already if you are one.

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