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Could Small Nuclear Reactors Be the Next Big Thing?

April 9, 2020

Could Small Nuclear Reactors Be the Next Big Thing?
An Oregon energy start-up company, along with the Oregon State University, may change the face of the nuclear energy industry. The company is developing a small nuclear reactor (SMR) which promises greater efficiencies and flexibility along with a higher degree of safety.

Safer, more efficient, SMRs have the potential to spur greater development of nuclear energy. As the fuel that powers nuclear energy, uranium has the potential to realize substantial gains if the demand for nuclear energy increases.

The North Shore Global Uranium Mining ETF may provide investors with an attractive vehicle to gain exposure to uranium.

Smaller Reactors
Nuclear reactors are large by design. In fact, according to the Nuclear Energy Institute (NEI), a 1,000-megawatt (MWe)[1] reactor needs just over one square mile.[2] They require large encasement towers and, due to safety concerns, must be located 10 miles outside of its service area.

In contrast, the SMR proposed by the Oregon startup would generate 60 MWe of electricity, according to Wired,[3] and would measure 65 feet tall and 9 feet in diameter. It would be encased in a containment chamber only slightly larger. About 100 of them could fit in the containment chamber of a large conventional reactor.

Potential Benefits of Smaller Reactors
SMRs are potentially safer because they are small enough to sit in underground pools of water. In the event of a leak, the heat can slowly diffuse into the pool. That would also allow them to be built closer to the places where the power is needed and within the 10-mile safety zone that a convention plant must have.

SMRs would add flexibility as they would allow nuclear energy plants to service areas that are too small to support larger, conventional reactors. Reactor size could be tailored to the service area, with new reactors being added if demand increases.

SMRs may also offer greater efficiencies due to their ability to be located closer to their service area. Local power would lose less energy in storage and transmission.

SMRs, owing to their smaller size, would require less capital outlay and may make financing easier to secure.

U.S. Nuclear Infrastructure Is Aging
The average age of U.S. nuclear reactors is 39 years, according to the U.S. Energy Information Administration (EIA).[4] They are nearing the end of their lives. As they are retired, they can be replaced with smaller plants closer to their service area.

Summary
SMRs, owing to their potential benefits, may help to increase the usage of nuclear energy around the world. As demand for nuclear energy grows, so does demand for uranium, its key ingredient.

How May Investors Gain Access to Uranium?

The North Shore Global Uranium Mining ETF (URNM)
The North Shore Global Uranium Mining ETF (URNM) seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the North Shore Global Uranium Mining Index (the index).

By seeking to replicate the index, URNM looks to provide investors with access to both miners and holders of uranium.


[1] A measure of energy output.
[2] Land Needs for Wind, Solar Dwarf Nuclear Plant’s Footprint, NEI, 7/9/15, Retrieved 12/18/19
[3] The Next Nuclear Plants Will Be Small, Svelte, and Safer, Wired, 12/13/19
[4] FAQs, U.S. Energy Information Administration website, Retrieved 12/18/19

Exchange Traded Concepts, LLC serves as the investment advisor. The Fund is distributed by SEI Investments Distribution Co. (1 Freedom Valley Drive, Oaks, PA 19456), which is not affiliated with Exchange Traded Concepts, LLC, North Shore Indices, or any affiliates.

Carefully consider the Fund’s investment objectives, risk factors, charges and expenses before investing. This and additional information can be found in the Fund’s full or summary prospectus, which may be obtained by visiting (urnmetf.com). Investors should read it carefully before investing or sending money.

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Shares are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Market price returns are based upon the midpoint of the bid/ask spread at 4:00 PM Eastern time and do not represent the returns you would receive if you traded shares at other times. The first trading date is typically several days after the fund inception date. Therefore, NAV is used to calculate market returns prior to the first trade date because there is no bid/ask spread until the fund starts trading.

Commodity prices may be influenced or characterized by unpredictable factors, including high volatility, changes in supply and demand relationships, weather, agriculture, trade, changes in interest rates and monetary and other governmental policies, action and inaction. Uranium Companies may be significantly subject to the effects of competitive pressures in the uranium business and the price of uranium. The price of uranium may be affected by changes in inflation rates, interest rates, monetary policy, economic conditions and political stability. The price of uranium may fluctuate substantially over short periods of time, therefore, the Fund’s share price may be more volatile than other types of investments. In addition, they may also be significantly affected by import controls, worldwide competition, liability for environmental damage, depletion of resources, mandated expenditures for safety and pollution control devices, political and economic conditions in uranium producing and consuming countries, and uranium production levels and costs of production. Demand for nuclear energy may face considerable risk as a result of, among other risks, incidents and accidents, breaches of security, ill-intentioned acts of terrorism, air crashes, natural disasters, equipment malfunctions or mishandling in storage, handling, transportation, treatment or conditioning of substances and nuclear materials.