Dear Reader,
The Nuclear Regulatory Commission just made history.
For the first time ever, the NRC approved a small modular reactor — an SMR — for construction.
It’s being built by the Tennessee Valley Authority at its Clinch River site in Oak Ridge, Tennessee.
If you’ve studied the Manhattan Project, you know that name.
Here’s what an SMR actually is.
I was talking to my kids about this.
Poor kids.
My son asked me how big it is.
About 88 feet tall — roughly the size of a nine-story building, maybe two or three buses stacked end to end.
The reactor itself goes underground.
It tops out at about 300 megawatts of power, which can serve approximately 240,000 homes.
And the NRC’s approval means the commission determined the design is safe and the TVA can begin construction.
Though there’s still one more hurdle — an operating license — before it can actually generate power.
Many hurdles.
But this is nuclear.
I understand why.
Why I Haven’t Recommended Nuclear
Here’s where I want to be direct with you.
If you’ve been following our model portfolios, you’ve noticed something.
I haven’t recommended any nuclear plays.
We’ve owned picks-and-shovels names that benefit from nuclear indirectly.
But I haven’t pulled the trigger on nuclear itself.
Here’s why.
In my experience as a business person and as an investor, opportunity flows to the lowest cost solution.
That is who gets paid.
Now let’s look at the numbers.
Nuclear — including this new SMR — costs about $18,000 per kilowatt to build.
Geothermal costs about $6,000 per kilowatt.
Natural gas costs about $2,500 per kilowatt.
Nuclear is seven times more expensive than natural gas.
Three times more expensive than geothermal.
When a data center operator or a utility sits down with their bankers and asks what’s the cheapest and fastest way to get this thing plugged in, nuclear is not the answer.
Water moves along the line of least resistance.
So does capital.
The AI Race Is an Energy Race
I’ve said this here many times.
Every great technology revolution is at root an energy revolution.
The AI race is no different.
And the companies that win the AI energy race are going to be the ones that can deliver power cheapest and fastest.
Right now, that means two things depending on where you are in the country.
Natural gas is the first choice almost everywhere.
At $2,500 per kilowatt, it’s the most affordable option by a wide margin.
Though it’s worth noting — gas was $785 per kilowatt back in 2022.
It’s tripled since then as Middle East tensions and the AI energy demand surge have pushed prices dramatically higher.
Geothermal is the second choice — and in the West, it may actually be the first.
Here’s why.
Gas turbine equipment is on such heavy back order right now that the wait times are extraordinary.
If you’re building a data center in Nevada or California or Utah, geothermal may actually get you to power faster than gas — even if you pay a modest premium over gas per kilowatt.
Speed matters.
In business and in warfare, speed is the key.
A data center that gets powered in 18 months beats one that waits three years for gas turbines to arrive.
And if you are interested in getting my #1 geothermal play on the market right now, check it out here>>>
The Bottom Line
The NRC’s SMR approval is genuinely historic.
It’s a meaningful step forward for American nuclear energy.
And over the very long term, small modular reactors may play an important role in the energy mix.
But right now, with gas at $2,500 per kilowatt and geothermal at $6,000 versus nuclear at $18,000, the economics don’t support nuclear as the primary AI energy solution.
That’s why our bets are on gas and geothermal.
And this is my #1 geothermal stock on the market today.
Have a wonderful day.
I’ll see you tomorrow.
“The Buck Stops Here,”
Found this helpful? Share it with others.
Written by Dylan Jovine