Interesting Drivers of Spectacular Electric Prices

Todd Moses
June 14, 2024

Demand for clean energy technologies intensifies in the push for energy transition, driving the need for critical minerals.

Inputs that matter: In the first quarter of 2024, primary nickel producers significantly increased their output, leading to an oversupplied market, while mined nickel producers reduced their supply.

  • Nickel is used for electric vehicle batteries and solar energy storage.
  • Uranium is an even more significant driver of electricity prices.
  • However, natural gas is the most significant influence on electricity prices for many parts of the country.

The opportunity: Driven by rising demand and massive supply disruptions, uranium prices shot up in 2007 from US$72 per pound at the start of the year to an all-time high of US$136.22 by early June.

  • Uranium prices didn't last long above US$100 per pound, and the market value of the energy fuel was in the doldrums for more than a decade.
  • Natural gas prices spiked in April 2024 and are currently inflated.

Zoom in: Uranium prices began to climb again in 2021 and increased speed in 2023.

  • This rally led the uranium spot price to hit a significant milestone in January 2024 when it broke through the US$100 per pound level for the first time in 17 years.
  • The drive for nuclear energy to contribute to the fight to combat climate change is also having an enormous impact on the uranium price outlook as governments look to atomic energy as a carbon-free energy source.

Between the lines: Helion Energy, where Sam Altman has invested $375 million, is adding fusion electricity to the Washington grid this year.

  • "This first fusion power plant, for which the feasibility is being assessed in Chelan (County), will produce electricity that will go to the grid; Constellation will serve as the Power Marketer for Helion's first customer, Microsoft," explains Jessie Barton, Helion communications director.
  • Fusion reactions occur in a state of matter called plasma — a hot, charged gas made of positive ions and free-moving electrons with unique properties distinct from solids, liquids, or gasses.
  • Fusion promises to lower the cost of production for electricity.

Follow the money: The natural gas markets have been volatile during the session, perhaps a little bit negative, but at this point in time, natural gas seems to be overextended.

  • We do have significant heat in the United States over the next several days, and markets have been banking on that.
  • This time of year is not typically very bullish for natural gas unless we get a massive surge of heat.

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Read More

  1. https://carboncredits.com/is-nickel-up-for-the-clean-energy-boom-prices-plunge-as-supply-surges/
  2. https://www.fool.com/investing/2024/06/11/why-cameco-corporation-stock-dropped-on-tuesday/
  3. https://investingnews.com/daily/resource-investing/energy-investing/uranium-investing/when-will-uranium-prices-go-up/
  4. https://banananomics.co/nuclear_fusion_and_the_ai%20_energy_crunch
  5. https://www.iaea.org/newscenter/news/what-is-nuclear-fusion
  6. https://www.fxempire.com/forecasts/article/natural-gas-price-forecast-natural-gas-continues-to-look-heavy-1438365