Nuclear energy is back in the spotlight, as the building of more nuclear reactors is in the works to deal with the nations energy issues, however, the price tag is high. Is this going to hinder the growth of nuclear exchange traded funds (ETFs)?

Safety and disposal issues aside, the high cost of building a nuclear reactor is what is at the forefront of the news. Mark Williams for the Associated Press reports that the shift away from fossil fuels will be met with the building of more nuclear reactors. Cost is going to be a factor at every stage of the building process. For example, this month in Missouri, the first of the next generation reactors was put on hold because of the $6 billion price tag.

Already, some states have altered laws so that consumers are actually paying for the bill of the cost to build a reactor to avoid problems such as the Missouri incident. The cost of labor, raw materials and technology have all grown exorbitantly. Because much of the new technology and building techniques are untested in the United States, construction will be lengthier, more expensive and riskier, according to a report issued by Standard & Poor’s.

So far, residential electricity rates have risen 1%-3% annually for AmerenUE customers, with an increase of up to 40% total. For now, low-prices and clean, carbon-free energy do not go together. Despite legislation, many consumers will see the construction costs on their energy bills.

The cost of reactors is just one of the issues the nuclear energy industry is faced with. Although interest has definitely increased, nuclear energy also has a reputation that precedes it.

  • Market Vectors Nuclear Energy ETF (NLR): up 7.5% year-to-date

  • PowerShares Global Nuclear Energy (PKN): up 2.6% year-to-date

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.