Boom time for nuclear ‘green’ power: how to cash in

Nuclear energy may officially be deemed “green” in a shake- up that would see billions of pounds diverted to the sector – but how can DIY investors get a piece of the action?

The Government is considering including nuclear energy in its framework for green investment and is in talks with power giant EDF over the construction of a £ 20bn nuclear power plant, Sizewell C, in Suffolk.

For DIY investors there are no listed nuclear power companies to choose from on the main London market. But investors could play the theme by buying uranium companies, said Russ Mould of AJ Bell, a stockbroker. The rare metal fuels nuclear power plants, and its spot price has surged by 16pc so far this year, to $34.25 per pound.

Mr Bell pointed to Yellow Cake, the uranium holding firm whose shares trade on the junior Alternative Investment Market and have risen by more than a quarter in the year to date.

Shares trade at a 25pc premium to the most recent valuation of its uranium holdings. But Yellow Cake has since fattened up its inventory, from 14 million lbs to 16 million lbs.

Mr Mould warned that not all investors were convinced of uranium’s green credentials. “Uranium miners dig through the Earth’s crust and leave a hole in it,” he said. “And the disasters in Chernobyl in 1986 and Fukushima in 2011 have cast a shadow over the industry.” But nuclear power is the largest single source of low- carbon generation in advanced economies, according to the International Energy Agency ( IEA). “Some investors would be prepared to classify uranium as a carbon solution,” Mr Mould added.

Ed Monk, of fund house Fidelity, also pointed out that nuclear power generation created tricky clean- up problems. For instance, services company Renew Holdings could benefit, since its engineering business – which accounts for more than 90pc of its turnover – involves decommissioning.

Mr Monk also emphasised that the argument for investing in the wider clean energy industry was very strong. “There is definite momentum towards renewables, especially ahead of the climate change conference, the Cop26, in Glasgow later this year,” he said.

He tipped the Guinness Sustainable Energy and Pictet Clean Energy funds, which both include NextEra Energy among their top five holdings. The company operates one of the largest nuclear power plants in America.

Kieran Drake, of analyst Winterflood, also flagged renewable infrastructure investment trusts, which typically come with high yields but often come at a premium.

“Often they are backed by government subsidies, which supports their ability to pay a dividend,” he said, pointing to Greencoat UK Wind, which boasts a yield of 5pc and trades at a 7pc premium to the value of its assets.