Multibillion-dollar investment gap yawns in global water and nuclear industries
The global water industry is estimated to require $400bn a year of investments, while the global nuclear market could see capital spending of $1.4 trillion by 2030. As the world leader in research and analytics for the clean and low-carbon energy markets, New Energy Finance is responding to a surge of investor interest in these exciting markets. It is launching two new free daily news services covering investment, financing, technology and policy in the water and nuclear power industries.
Nuclear power and climate change
Global awareness of climate change has lead to a dramatic shift in opinions concerning nuclear power as a source of clean electricity generation, with the US, China, UK and many other countries setting ambitious targets for the building of new power stations. In the US market alone, the nuclear industry will need to add 35 to 50 new nuclear plants by 2030 just to maintain its existing share of power generation. The US government presently holds loan guarantee applications for 21 new reactors for which the aggregate estimated construction cost is $188bn. This suggests a total market opportunity of $315bn to $450bn just in the US, if proposed new power generation capacity additions are realised by 2030.
New Energy Finance analysis suggests that a 30% increase in global nuclear capacity is possible within 12 to 15 years, at a total capital cost of some $400bn to $500bn. However, the nuclear energy industry faces several challenges in fulfilling its promise as a carbon-free alternative to continued fossil fuel deployment.
Although today's nuclear power plants are often low cost producers of electricity, rising global commodity prices are driving up the price of building and operating all new power generation assets. To ensure its future in the global power generation mix, nuclear power needs to offer plant design, construction and operation that are cost-competitive with all other technologies. In addition, managing the safe disposal of spent nuclear fuel while reducing the risk of nuclear proliferation must be demonstrated to, and accepted by, the public.
Michael Liebreich, chairman and CEO of New Energy Finance, said: “We have always said that there will be no single solution to climate change and energy security problems. Renewable energy will be hugely important, as will energy efficiency, but nuclear is also likely to play an enhanced role.
“Hundreds of billions of dollars will be spent building new nuclear capacity, with China, India, Russia and the US among the focal countries. In addition, around the world, existing plants will see their life-spans increased. We expect this to create investment opportunities not just for builders and operators of power plants, but also throughout the supply chain and among service providers, including the sort of businesses attractive for venture capital and private equity investors,” Liebreich predicted. “Then, if the current research efforts in China, Japan, Korea and South Africa result in a fourth generation gas-cooled modular reactors, this would significantly expand the use of nuclear technology for many process heat and power generation applications, giving the market a further boost.”
Liebreich also acknowledged that there were policy and public acceptance hurdles that would still need to be overcome by the global nuclear industry: “There is still much controversy over the true cost of nuclear power. In essence it is affordable, as long as it is understood that the State is the insurer of last resort. Any significant new build programme will depend on financiers receiving clarity on this point, which politicians can only give if their voters are in accord”.
Service for the nuclear markets
In addition to its free financial news headline service for nuclear power, New Energy Finance will be launching a full subscription research service later this year. This will help global investors to play an important and profitable role in the forthcoming nuclear renaissance and have a major impact in reducing emissions from power generation.
New Energy Finance has appointed Chris Gadomski to lead the company’s nuclear analysis team, which will launch a monthly nuclear report in Q4 2008 and a Nuclear Insight Service at the beginning of 2009. The nuclear team will provide cutting edge analysis on critical topics from within the nuclear industry each month as well as providing a comprehensive quarterly sector summary and analyst reactions to key nuclear market news and events.
Gadomski has over 25 years experience in the energy sector, advising leading multinational firms and institutions including the United Nations Development Program, World Bank, US Department of Energy, and UNDP/Global Environment Facility. Gadomski is a member of the United States Energy Association and the American Nuclear Society. He teaches energy policy and finance at the Center for Global Affairs at New York University and has published extensively on energy and power generation topics in: Modern Power Systems, EuroMoney/ Institutional Investor's Project Finance Magazine, World-Generation and The China Business Review.
Ever increasing pressure on water resources
Increasing population, industry, economic growth and urbanisation all put additional stress in the provision of clean water from dwindling reserves. As well as stretching renewable supplies of fresh water to their limits many countries are severely depleting the finite supply of water from underground aquifers.
The United Nations estimates that 1.2bn people worldwide do not have access to safe drinking water and the OECD estimates that around 5.2m people die each year from waterborne diseases, caused, in part, by lack of proper sanitation and treatment of wastewater. To close the gap the Global Water Partnership estimates that $4.5 trillion in investment is needed to address water infrastructure over the next twenty years.
Investment in water technologies
Increased infrastructure, innovative financing methods and a broad range of new technologies will all be important in helping the world to meet its water needs over the next decades.
Desalination and drinking water recycling, and as well demand-side technologies such as smart distribution and metering are likely to be growth markets for the future combined with the existing markets for irrigation technologies, infrastructure and engineering.
New Energy Finance will provide investors with daily news headlines on the water markets, in areas such as policy, technology, investment activity and company movements, enabling its clients to keep pace with this fast changing, increasingly important market.
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For further information, contact:
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Ethan Zindler, Head of North American Research, New Energy Finance
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