January 22, 2025
The Nuclear Solution to America's Hidden Crisis
Dear Subscriber,
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| By Sean Brodrick |
I visited the Hoover Dam last week. It was thrilling to see this monument to American ingenuity.
When it was constructed, between 1931 and 1936, a concrete structure this large had never been built before. An entire river had to be redirected to make it happen.
Yet the whole thing was built two years ahead of schedule.
I got to visit the huge generators at the foot of the dam. There are 17 in total — eight on the Nevada side and nine on the Arizona side — and each weighs more than the Statue of Liberty.
The Hoover Power Plan can produce 2,080 megawatts of power at peak capacity.
And yet, I saw only one generator on the Nevada side in use.
Why the heck was that?
“It’s the drought,” my guide told me.
He explained that Hoover Dam was built first and foremost as a water control project to tame the flash floods of the Colorado River. Today, seven states draw water from the Colorado River.
The Hoover Dam remains the essential water irrigation source for the Southwest. It supplies more than 1.5 million acres of irrigated areas in California and Arizona.
Now, the level of Lake Mead — America’s largest artificial lake — is much lower than they’d like. Thanks to the severe drought that plagues the American West, the Hoover Dam hasn’t produced near its top power generation in years.
The Hoover Dam's power generation capacity has been reduced by about 40% compared to pre-drought levels. If they put more water through the dam to generate more power, Lake Mead would be drained faster.
Lake Mead recently had a water level of 1,065 feet above sea level. The minimum water level at Lake Mead needed to generate power at Hoover Dam is 950 feet.
And if Lake Mead fell to 895 feet — what’s called the “dead pool” level — Hoover Dam would no longer be able to pass water downstream to all those thirsty farms.
This problem isn’t going away anytime soon.
The Southwest is in a megadrought, as it’s called, which started 25 years ago. It’s the worst drought in more than 1,200 years.
And models predict the megadrought will last to the end of this century.
This is squeezing hydropower all across the continent.
Since 1980, four-fifths of hydropower plants have seen power generation decline, with a net loss of 13% across all plants.
The capacity loss since the 1980s is the same as retiring a Hoover Dam every two to three years.
About 6% of America’s electricity comes from hydro. That’s down from a decade ago.
Yeah, no surprise. The megadrought is putting hydro plants on a forced diet.
This problem is becoming worse because the demand for electricity in the U.S. is accelerating.
Here’s a chart of U.S. industrial power demand …
This shows us that the rolling 6-month change in the electric power component of industrial production rose 2% in December. That is stronger than the longer-term median. Power use is accelerating!
And there’s a significant new source of power demand — artificial intelligence.
This following chart shows the expected growth in global and U.S. data center power demand, with and without AI.
To this, we can add surging consumer demand. The electrification of everything continues. We all have more and more electric devices in our homes all the time, and they’re using more power.
As I told my Wealth Megatrends Members back in December:
“A new study from Grid Strategies reveals that the forecast for U.S. electricity demand is skyrocketing. And it specifically names manufacturing and data centers as two drivers.
“Grid Strategies say that over the past two years, the five-year U.S. electricity demand forecast has increased by nearly a factor of five, from 23 gigawatts (GW) to 128 GW.”
So, what are investors to make of this? I gave my Wealth Megatrend readers an idea, an idea that is doing very well. You might say we’re looking for a nuclear melt-up.
Yes, my idea is a stock leveraged to nuclear power. Nuclear power requires water, but not nearly as much as hydropower. And it can keep the lights on, come rain or shine or drought!
I think 2025 is a year for uranium stocks to shine, but other ways exist to play this trend. I’m talking about stocks across the nuclear spectrum. And precisely those that provide nuclear-generated electricity.
One fund that holds a wide range of stocks leveraged to the nuclear renaissance is the Range Nuclear Renaissance Index ETF (NUKZ).
It has an average volume of just under 100,000 shares a day and an expense ratio of 0.85. Here’s a daily chart …
You can see NUKZ is testing overhead resistance and on higher volume, too. It looks ready to break out to me. This fund is up 42% since September. I believe it could double in the next few years.
The facts are that America is using more electricity than ever, even as a megadrought starves one of America’s primary sources of clean power.
We need to find more clean power — and I believe industries, consumers and more will eagerly pay for nuclear power.
All the best,
Sean
P.S. There are other solutions that need to be enacted today to deal with the boom in data center power demand. In fact, my colleague has a new presentation on exactly that. He calls it "Beyond AI."
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