Welcome to the Extreme Investor Network, where we bring you the latest insights and trends in the world of investing. Today, we are diving into the exciting opportunity presented by the U.S. nuclear fleet as a power source for artificial intelligence and data centers.
According to Citigroup analysts, regulated utilities such as Duke Energy and Southern Company are the best way to play this trend. Data centers are projected to drive 31 gigawatts of incremental power demand by 2030, leading to increased utilization of the existing U.S. nuclear fleet of 95 reactors.
The Inflation Reduction Act provides a production tax credit of $15 per megawatt hour of electricity from nuclear facilities from 2024 to 2032. This tax credit serves as a structural price floor, providing revenue stability and potential earnings growth for regulated utilities.
Duke Energy and Southern Company, with their significant nuclear capacity, are poised to benefit from the PTC cash flow benefits that will ramp up from 2024 to 2027. This increased cash flow can be used for financing or reinvesting in capital expenditures, improving their long-term financial outlook.
Investors have taken notice of this opportunity, with Duke Energy up 12% and Southern Company up 17% over the past three months. Duke Energy operates approximately 9 gigawatts of nuclear capacity, while Southern Company operates 5.4 gigawatts.
As the demand for clean, reliable energy sources continues to grow, regulated utilities with nuclear assets are well-positioned to leverage the benefits of the PTC and drive earnings growth. Stay tuned to Extreme Investor Network for more updates on this and other investment opportunities in the ever-evolving market landscape.