Renewable energy investing: How to play solar & nuclear

00:00 Speaker A

And so, at the same time, I mean, let’s talk investment playbook for a minute here because it sounds like there is an investible case for each of these buckets. We didn’t talk about wind so much, but maybe we’ll get to that in a minute. Um, so in each of these buckets, like let’s take solar. What would be your top pick within solar?

00:19 Speaker B

Yeah, so on the utility scale side, I mean we really like First Solar as as the as the go-to. You know, they’re America’s manufacturing company for solar and they have all the tailwinds of, you know, if you if you go back to, you know, the OB3 back in July, they’re sort of the winner of this all, I guess I would say, given their manufacturing footprint is is located in the US. They, you know, fully source 100% of their materials or they can in the US. And then they’ve got, you know, the competition’s all importing. They’re now facing tariffs. The competition also is, you know, either a Chinese domiciled company that is now facing restrictions next year in terms of what what they can sell here. And so that company stands out as as a potential winner, you know, very, very near term. There’s dynamics going on with what I would say is, you know, uh call it call it uh a garage sale of of solar panels to get ahead of some of the restrictions that are coming in place next year, but um, you know, starting next year, I think first solar looks starts to look really really attractive.

01:21 Speaker A

Are they capacity constrained at all? Can they make enough to keep up with the demand that we’re seeing, you know, out next year?

01:29 Speaker B

Yeah, so they’re on the domestic supply piece, they’re actually sold out through 2028. Now, they have opportunities to bring more manufacturing capacity into the US. You know, they they manufacture in in Southeast Asia and they’re, you know, I think at least they’re going to shift uh a line over to the United States so they’d, you know, within a year or so they’d potentially have more more supply on that can can they can sell.

01:54 Speaker A

Now, um in nuclear and we should mention you don’t cover the sort of big legacy power generators that have the older nuclear plants. There aren’t many choices on the new nuclear side. You cover NuScale. I think that if I’m not mistaken, that’s the only one.

02:08 Speaker B

GE Vernova. Because they supply. Yeah. Well, they they have a nuclear plant as well, an SMR be it’s called the BWRX 300. So it’s it’s sort of a a shrunk down size of the call it old school traditional traditional nuke. And you know, I guess from my perspective it’s it’s a huge opportunity. I mean what’s available today, you know, NuScale has done arguably the best job getting into a position where they can sell a nuclear plant today. They went to there’s, you know, the regulatory commission that that governs these things and they have approvals that say, hey, these, you know, the NRCs has reviewed all our docs. It takes many, many years, but they reviewed all the docs. They’ve agreed that this is safe and it’s it’s ready to go today. And I think from a company that’s, you know, new to the market, that’s a huge vote of confidence and you can take that to a potential customer and sell it.

03:00 Speaker A

And yet you’re sector perform on NuScale.

03:03 Speaker B

Yeah. So and I think this really just comes down to more, you know, expectations around timelines and nuclear development takes a long time and, you know, even though NuScale has a, you know, design approval from the NRC, it still takes call it five, six years to build one of these. And, you know, our our opinion is that they’ll get the the initial one green lit and they’ll start construction, but then what happens over that time are are, you know, new investors and and new customers comfortable coming in and buying plant number two, plant number three, while the first one’s still undergoing construction and, you know, one of the biggest risks in in this industry is, uh, you know, these developments cost two times as much as they’re supposed to and they take three years longer. And so there is this sort of proof process that I think has to go on for for them and everyone else in the industry where they need to show that they’re on time and on budget.