Robert Swift, Portfolio Manager of TAMIM Asset Management’s Global High Convictions Portfolio, dives into the contentious global discourse on nuclear power. With the stakes higher than ever due to growing energy demands, environmental challenges, and geopolitical pressures, he argues for a balanced, fact-driven conversation. Highlighting examples from international markets, Robert explains why nuclear power deserves a fresh evaluation and identifies investment opportunities in undervalued sectors that could significantly benefit from this shift.

The Ideological Divide on Nuclear Power in Australia

Australia’s energy debate has reached an ideological impasse, with nuclear power often dismissed without thorough consideration. This ideological lens has obstructed a rational, data-driven evaluation of nuclear’s potential benefits. Robert Swift emphasises the need to break through this impasse, noting that renewables, while essential, are not free of environmental trade-offs. He highlights that the production and deployment of renewable energy systems, particularly wind and solar, rely heavily on cement, a material that emits a wide range of harmful substances, including but not limited to carbon dioxide, and lithium which is essentially a hazardous material.

Japan: Unlocking the Potential of Mothballed Nuclear Plants

Turning to Japan, Robert highlights how mothballed nuclear facilities represent untapped opportunities. Following the Fukushima disaster in 2011, numerous plants were shut down, leaving valuable assets underutilised. Companies like Kansai Electric, Shikoku Electric, and Hokkaido Electric stand out as possessing significant potential for investors and operators of data centres should the Nuclear Regulation Authority in Japan allow them to re-start.

Hokkaido Electric’s (TYO: 9509) Tomato-Atsuma Power Station 

One of the most intriguing opportunities lies with Hokkaido Electric’s Tomato-Atsuma plant. Idle since 2011, this facility boasts a capacity of 4,000 GW. Located near Sapporo, it presents a strategic opportunity for powering data centres, which are increasingly critical in today’s digital economy. Additionally, reintegrating such plants into the energy grid could enhance energy interconnectivity across Asia, providing a reliable and efficient supply chain for regional markets.

Hokkaido Electric’s undervalued stock price reflects market skepticism but could offer significant upside potential as Japan accelerates its nuclear revival. Similarly, Kansai (TYO: 4613) and Shikoku Electric (TYO: 9507), with their own dormant assets, are positioned to benefit from increased political and public acceptance of nuclear power as a sustainable energy source.

Data Centres and the U.S. Energy Challenge

In the U.S., the rapid growth of data centres has placed enormous pressure on an aging power grid. These energy-intensive facilities require consistent and high-capacity power, but existing infrastructure often struggles to keep up. This scenario highlights the urgency for scalable energy solutions, including nuclear.

Robert sees parallels between the U.S. and Japan, noting that the undervaluation of Japanese electric utilities could lead to substantial outperformance. While the market has been captivated by the AI boom, he argues that the underlying infrastructure needed to support this technological revolution is where investors should focus.

Australia: Falling Behind in the Nuclear Race

Australia remains an outlier in the nuclear energy discussion, hindered by political and regulatory barriers. Despite having abundant uranium reserves and a stable geological landscape ideal for nuclear facilities, the country has yet to seriously consider nuclear as a viable component of its energy mix.

Robert stresses that Australia’s reluctance to embrace nuclear could have long-term consequences. While renewable energy remains a vital part of the solution, the integration of nuclear power could address issues of grid reliability and energy storage that renewables alone cannot solve. He believes that a pivot toward nuclear energy is not only possible but essential for meeting Australia’s future energy needs.

Investment Opportunities: Where to Focus

Robert identifies a number of companies and sectors poised to benefit from a renewed focus on nuclear power:

• Hokkaido Electric Power (Japan) (TYO: 9509): Undervalued with substantial capacity in mothballed plants like Tomato-Atsuma, this utility could see significant gains if nuclear power regains traction. West Sapporo is essentially cold and remote; an ideal location for both PWR reactors and data centres which generate heat. If I were a US tech company I would be proposing an offtake agreement for a newly constructed data centre in exchange for a capital injection to reduce the balance sheet leverage of Hokkaido Electric. 
• Kansai Electric and Shikoku Electric (Japan) (TYO: 4613): Both have dormant assets that could become critical as Japan’s energy strategy shifts back toward nuclear.
• Data Centre Infrastructure Providers: Companies involved in data centre development, particularly in regions like Sapporo (TYO: 2501), could gain from increased power stability offered by nuclear energy.
• Grid Modernisation Firms: In the U.S., companies upgrading grid infrastructure to handle higher power demands represent another compelling opportunity.
• Renewable-Nuclear Synergies: Firms leveraging a combination of renewable and nuclear technologies to create hybrid energy systems could redefine energy efficiency standards.

The TAMIM Takeaway 

The debate over nuclear power requires a shift from ideological posturing to pragmatic problem-solving. With the right investments, countries like Japan and the U.S. are already demonstrating how nuclear power can complement renewables to create a balanced and sustainable energy future. For Australia, the message is clear: by reconsidering nuclear energy, the country could unlock new opportunities for economic growth and environmental stewardship.

TAMIM Asset Management, through its Global High Conviction Portfolio, continues to identify and invest in undervalued companies that stand to benefit from these transformative trends. As the energy landscape evolves, so too will the opportunities for investors prepared to think beyond conventional narratives.

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Disclaimer: Hokkaido Electric Power (TYO: 9509) is held in TAMIM Portfolios as at date of article publication. Holdings can change substantially at any given time.