How Australia's nuclear debate could hit renewables investors

Opposition Leader Peter Dutton has committed to fight the 2025 Federal Election on energy policy, planning to introduce State-sponsored nuclear power
Experts say investment in green energy projects and stocks could be impacted, with listed players already looking to invest overseas
Uranium miners have been supporters of Australia adopting nuclear power, but Tribeca’s Guy Keller says growing yellowcake demand elsewhere will be the driving force for ASX U3O8 stocks

A culture war over the energy transition has sparked a nuclear reaction between Australia’s major political parties, but sentiment for green energy stocks could also be among the fallout from the Coalition’s nuclear-first energy policy.

Energy prices became a hot button issue in Australia as PM Anthony Albanese’s Labor Government came to power in 2022 with the Russian invasion of Ukraine sending fossil fuel prices sky high.

With concerns about grid security threatening to slow the replacement of ageing coal-fired power stations with renewables, it’s now become one of the key fault lines on which the 2025 poll will be fought.

Peter Dutton’s Opposition has promised to end a more than 25 year moratorium on nuclear energy, introduced in 1998 by John Howard’s conservative government in a compromise with the Greens and Democrats, planning to use taxpayer’s money to establish seven nuclear stations at the sites of retiring coal plants.

A counterpoint to Labor’s plan for 82% of Australia’s energy grid to be renewable in just six years, the kitchen got even hotter after Nationals Leader David Littleproud flagged that if the Opposition won the election it would place scrutiny on environmental approvals for wind farms, potentially placing a ‘cap’ on where they could be rolled out.

How could this effect renewable energy projects and the ASX stocks tied in with the green energy sector?

Undermining confidence: Clean energy investors

The Clean Energy Investor Group, a representative of 18 domestic and international investors in utility-scale renewable energy projects with a combined Australian portfolio of over $38b, says putting a cap on renewable energy investment would be a regressive policy.

Interim CEO Marilyne Crestias claims it will introduce sovereign risk, dampen Australia’s attractiveness as a destination for clean energy investors, and undermine the confidence of investors who have already committed billions to Australian decarbonisation.

“Substantial changes of policy direction would risk derailing the momentum we have built for Australia’s decarbonisation journey,” Crestias said.

“A stable and predictable policy environment is essential for attracting and retaining the significant capital required to achieve our renewable energy targets.

“The potential withdrawal from renewable energy targets exacerbates this uncertainty, deterring future investments and prompting current investors to reassess their positions.”

Less opportunities for renewable energy development

ELM Responsible Investments, an ESG-focused investment manager that invests in the fields of environment and climate, health and education, digitisation and housing, said the nuclear policy has the potential to impact renewable stocks and drive their focus offshore.

In an interview with Stockhead, ELM founder and portfolio manager Jai Mirchandani said local companies like Boom Logistics (ASX:BOL) – who work on renewable energy projects such as wind farms and Snowy 2.0 – might find significantly less opportunities in the sector over the coming decades if the Coalition wins next year.

“The reality is that the energy transition is happening globally, so we’ll start to see ASX-listed companies look overseas if they can,” he said.

“The demand for lithium and its use in EV batteries is also global, so critical mineral miners like Pilbara Minerals (ASX:PLS) are unlikely to be significantly affected.

“(But) developers are already looking globally.

“We are invested in Infratil (ASX:IFT), a renewable developer, who develop projects globally and have already sold out of their assets in Australia.

“The debate around nuclear, particularly with the Coalition being clear on actively reducing renewable developments, introduces a degree of sovereign risk that will devalue energy transition companies and lead some investors to reduce their exposure.”

Nuclear debate having no impact on uranium stocks

While nuclear power may remain banned, Australia hosts 33% of the world’s known uranium resources and is the third largest producer globally after Kazakhstan and Canada.

It already accounts for 10% of all electricity generated globally.

But the Coalition is banking on the possibility that fission energy in Australia could be possible by 2035 – 2037 with the construction of an initial two plants, with the remainder arriving in the 2040s.

Some of the most passionate supporters of nuclear energy in Australia have been uranium miners and explorers, many of whom are fighting their own battles with Australian states outside South Australia to support yellowcake mining.

The introduction of nuclear power could create a domestic market for uranium and potentially enrichment, but one that won’t be realised for years, if not decades, to come.

Currently there are three operating uranium mines in SA – BHP (ASX:BHP) Olympic Dam, where U3O8 is a by-product of its more strategically important copper output, the American owned Beverley mine and the recently reopened Honeymoon, where $1.6b capped Boss Energy (ASX:BOE) is about to wave off its maiden shipment.

But the portfolio manager of Tribeca’s Nuclear Energy Opportunities Strategy Guy Keller, said what Australia does in the grand scheme of things is largely irrelevant for nuclear demand and the prospects of local producers.

“The Australian nuclear debate isn’t having any real effect on uranium prices or stocks but it has got a lot more people focused on what is nuclear and what is uranium,” he told Stockhead.

“People are starting to get a little more educated on the matter, and potentially, that may mean investors start looking for investment opportunities in the space because there are 32 other countries in the world using it and there’s not enough uranium being mined.

“That may potentially trickle down so that ASX-listed uranium opportunities find some marginal buying but, in the mainstream, it’s not making that much of an impact aside from the uranium companies getting a little more attention.”

Keller argued uranium stocks should be on the radar of ESG-focused investors, with the extension of existing nuclear utilities and construction of new plants among the decarbonisation strategies being promoted outside Australia.

“That said, I think it’s great Australia is having this debate and while I don’t know whether it’s the right solution or not, we need to consider it,” he said.

“We’ve seen globally a big shift in energy transition and ESG investors like Blackstone and BlackRock talking about nuclear’s role in providing the electricity that is going to be required for the Western world – it will be needed to decarbonise transport and industry as well as cater for the huge demands from data centre and AI growth.

“Just because there’s a ban in Australia doesn’t mean that energy transition and ESG investors in Australia wouldn’t also be looking at it, they’d be silly not to,” Keller said.

“The interesting thing is when you speak to these sorts of investors, they never really were anti-nuclear, there’s not many Australian investors out there with a strict anti-nuclear policy.”

Prices could reach $120 in second half

One aspect of the market that ASX uranium companies are likely to benefit from is high prices, which incentivises companies to carry out exploration programs, prove up resources, and potentially develop new mines.

From lows of ~US$18/lb in 2018, prices recovered slowly before more than doubling between January 2023 to 2024, hitting a 16-year high of US$107/lb after the strongest contracting year in a decade.

Having launched in 2018, Tribeca’s nuclear fund had recorded a 565% gain when those long time highs were hit in January.

Spot prices have since pulled back, placing a seed of doubt that the bull run for uranium, a commodity renowned for its false dawns, could peter out early.

Keller says the speed of the upswing caught a lot of people by surprise and with the benefit of hindsight, it’s no wonder that the price didn’t remain at those levels.

“When I look at the behaviour of how the uranium market trades, when it establishes new ranges like it is now of between US$85-95/lb, it very rarely pushes below those ranges for very long.

“As we’ve seen in the past, it then ratchets up. We’re coming into a seasonally slower period with the Northern Hemisphere summer, but things start to speed up quite quickly with uranium in August and September.

“I wouldn’t be surprised to see prices in the third or fourth quarter hit the US$100-120/lb range, or maybe higher as the utilities come back on.

“So the fact that there’s been very little activity and we’re holding this range is actually really, really reassuring.”