Recently, nuclear fusion reached a major milestone. And it could be a gamechanger for the future of energy.
From my conversations in Washington, I know there are a lot of eyes on nuclear right now. In fact, I believe it will be one of the biggest government winners of 2023.
So today, I want to pull back the curtain on this massive development and show you what it could mean for your money.
A Gamechanger for Nuclear Energy
If you’re a regular reader, you’ll know about nuclear fusion. It’s essentially the same process that powers the sun.
Fusion happens when two atoms slam together to form a heavier atom. It creates enormous amounts of energy. You can get an idea of how it works in the graphic below…
Now, all nuclear power plants use something called nuclear fission. It’s the current technology that powers nuclear energy plants. But fusion is very different. And it’s still in development.
The idea behind fusion is to create the same kinds of temperatures and pressures that exist in the cores of stars. And last month’s breakthrough is a gamechanger.
That breakthrough came from the Lawrence Livermore National Laboratory (LLNL). It’s based in the U.S.
A team at LLNL’s National Ignition Facility (NIF) achieved fusion ignition. They used as many as 192 laser beams, housed in a 10-story building the size of three football fields.
Here’s why this experiment is a big deal…
Up until now, scientists used more energy to fuse atoms together than they managed to get out of the reaction.
But this time, they got a net positive nuclear fusion reaction.
In other words, it’s the first time in history that scientists got more energy out of the fusion reaction than they used to make the atoms fuse.
That’s a major milestone.
And this isn’t just a “great proof of concept.” We already knew that we could recreate nuclear fusion on Earth.
But this marks the point at which a fusion reaction is self-sustaining. That means that, in the future, it will likely make economic sense as a source of energy.
The Future of Energy Is Closer Than You Realize
Many pundits say that viable energy from nuclear fusion is still decades away. But they are wrong.
The reaction produced 3.15 megajoules of energy. That’s enough to power a 60-watt lightbulb for about 14 hours. That might not sound too impressive… But it wasn’t the energy output that drew my attention.
What matters is that this experiment was 2.4 times better than NIF’s last experiment in August. And it beat a prior world record set in 2018 by 25 times. That’s impressive.
That’s why I say nuclear fusion is coming much faster than most people think. And the National Ignition Facility’s experiment shows that.
Now, the NIF is a key facility for the research and development of nuclear weapons.
That means they are probably more interested in building mini hydrogen bombs, and less in ushering in the future of energy.
That said, I expect this development to spur the private industry to new breakthroughs in 2023 and beyond. That’s because where public money goes… private money follows.
What This Means for Washington and Your Money
Whatever your views are on nuclear energy… We know that the world will need a lot more energy over the coming decades.
In fact, the EIA estimates a 50% increase in global energy use by 2050.
And I expect a lot more federal funding to come for nuclear energy projects.
This is not a new trend. The U.S. government has been putting money into fusion research since the 1950s. Today, it invests about $700 million per year.
But last year, the Department of Energy put some real money into for-profit fusion companies. It announced that $50 million will go toward private nuclear fusion companies in public-private partnerships.
And as I know from my own conversations on Capitol Hill, nuclear energy is one thing that politicians across the aisle agree on.
For example, Rep. Garamendi (D-CA) is against nuclear proliferation. But he supports building out nuclear power projects to power Main Street.
The same holds true with Rep. Thomas Massie (R-KY). I’ve met Massie before, and I have fond memories of a long conversation I had with him about derivatives and banking.
This year, I hope to have more conversations with him or his staff on energy independence.
Of course, we’re still far from powering our homes with nuclear fusion. But there are other areas of nuclear energy that you can invest in already.
That’s where it pays to follow Washington’s cues to find the stock market winners. And last year’s Inflation Reduction Act is a big one.
It includes a tax credit for existing nuclear plants. That provides up to $15 per megawatt-hour for the electricity produced by nuclear power plants in 2024-2032.
For easy exposure to nuclear, you can consider investing in the Global X Uranium ETF (URA). The fund holds a basket of uranium producers, physical holdings, and property developers.
Now, it’s not a way to play nuclear fusion. That doesn’t exist just yet for Main Street. But URA can give you broad exposure to the nuclear energy trend.
Editor, Inside Wall Street with Nomi Prins
P.S. URA is a great place to start. But if you’re looking for higher potential upside, I just recommended a promising company in our Distortion Report advisory.
It has tight relationships with the U.S. government. And it has a whole team with top secret clearance, so it can work on sensitive projects. As nuclear continues to take hold in Washington, I expect this company to see more contracts.
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