A renaissance in nuclear energy investments

• Once overshadowed by solar and wind, nuclear energy is now emerging as a cornerstone of innovation, driven by advancements in technology and shifting policy priorities, according to Fidelity Portfolio Manager Asher Anolic.
• “Nuclear energy is no longer a relic of the past but is poised to be a foundation for the future,” says Anolic, who manages Fidelity Advisor^® Climate Action Fund. “I continue to see investors interested in reducing greenhouse gas emissions, and while public discourse in some regions may appear fragmented, the commitment to clean energy abroad remains steadfast.”
• The thematic equity strategy, launched in 2021 with Anolic at the helm, focuses on domestic and international companies that are working to address climate change or its impact, either indirectly through their corporate strategy or directly through the technology, services and/or products they provide.
• Even in the United States, where enthusiasm for climate action has diminished in some quarters, Anolic observes that investors are quietly pivoting toward strategies that support climate transition goals while accounting for economic and political realities.
• Meanwhile, he notes that governments and corporations throughout Europe and Asia are intensifying their investments in renewable energy initiatives.
• “Another component of this nuclear renaissance is small modular reactors, or SMRs,” Anolic explains. “Unlike traditional nuclear plants – which often face challenges like extended construction timelines and cost overruns – SMRs offer a scalable, cost-effective solution.”
• He says that this technological leap is already reshaping markets, given that these compact reactors are designed to be built faster, deployed more flexibly and integrated seamlessly into existing energy grids.
• Furthermore, Anolic points out that older reactors are being recommissioned, signaling renewed confidence in nuclear energy’s potential, as well as growing investor interest. 
• For example, in September 2024, independent electricity producer Constellation Energy and Microsoft announced that Constellation’s Three Mile Island nuclear site would provide the software and cloud-computing giant with the electricity it requires to power the massive data centers it uses for artificial intelligence, beginning in 2028.
• Anolic cites several other companies that are leading the way in this new era of nuclear energy, including Cameco, a key player in uranium mining that provides the essential fuel for reactors.
• Additionally, Centrus Energy specializes in fuel refinement, ensuring efficiency and reliability, while Fluor is central to the nuclear construction business, especially the development of next-generation facilities.
• Although nuclear fission – considerably different from traditional fission – is the current focus, the horizon of clean energy extends considerably further, in Anolic’s view. Geothermal energy is nearing commercial viability, introducing another potential sustainable option, while nuclear fusion – the holy grail of energy innovation – remains a longer-term play, he says.
• Still, firms like Commonwealth Fusion Systems are pushing the boundaries of what’s possible, with upcoming milestones that could ignite renewed interest and long-term planning.
• “I believe it’s time to take a serious look at nuclear, not just as an energy source, but as a strategic investment in the future of sustainability,” Anolic concludes.

Microsoft, Cameco, Centrus and Fluor were fund holdings as of October 31.