SCANA Corporation (SCG), The Southern Company (SO), NextEra Energy, Inc. (NEE): Will Natural Gas Kill Nuclear?

Nuclear is the instant coffee of energy. It’s fast, accessible, and (as long as you’ve got a water boiler around) relatively cheap. But what’s here today may be gone tomorrow, according to a new report outlining the long-term outlook for nuclear generation. Let’s take a closer look to see if nuclear’s got what it takes to keep pouring profits into your portfolio.

The buzz
Nuclear energy currently accounts for 101,000 MW of our nation’s electricity, about 19% of total generation. But nuclear’s heydays of new construction are well behind it. Plants are incredibly capital intensive, and new regulation keeps costs prohibitively high for most expansion opportunities.

Nuclear’s worst nightmare was, until recently, natural gas. But nat-gas prices are headed higher for 2013 and beyond, and nuclear may be back in business.

Although grandiose new projects are currently out of the question, construction and uprates will add an additional 19,000 MW of nuclear capacity over the next 25 years.

By 2020, TVA’s Watts Bar plant, SCANA Corporation (NYSE:SCG)‘s V.C. Summer station, and The Southern Company (NYSE:SO)‘s Vogtle project will contribute 5,500 MW of new nuclear. Just two weeks ago, NextEra Energy, Inc. (NYSE:NEE) announced that its newly completed five-year-uprate project added 500 MW of capacity, exceeding expectations by 25%.

Meanwhile, nuclear powerhouse Exelon Corporation (NYSE:EXC) will continue to generate around 20% of the nation’s nuclear energy with its 10 power plants and 17 reactors.

But natural gas prices dictate the degree to which nuclear demand heats up or cools down. A new EIA report outlines their expectation and three alternative scenarios for investors to swallow:

Source: EIA.gov

High gas prices could push up nuclear capacity by 26,000 MW. Alternatively, cheap natural gas would keep nuclear capacity constant over the next 25 years.