"The Most Dangerous Power Source?" "Closure Was a Huge Mistake"... The Paradox of Nuclear Power Revealed by War [Weekend Money]

Amid the geopolitical crisis triggered by war between the United States and Iran, the importance of alternative energies, including nuclear power, is rising. The blockade of the Strait of Hormuz has destabilized traditional fossil fuel-centric supply chains, bringing renewed attention to the role of nuclear power plants from an energy security perspective.

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According to NH Investment & Securities on April 25, researcher Minjae Lee recently stated in a report titled "Geopolitical Changes and Energy Transition After the US-Iran War" that "Nuclear power is the most dangerous in human history, but has proven to be the safest source of energy during wartime." He added, "Investments to supply power for renewable energy and even ship engines will continue."

During the war, nuclear power plants in the Middle East have operated stably without radioactive leaks, even under direct threat of attack. This was also observed during the Russia-Ukraine war. Since an attack on a nuclear plant could cause widespread damage, these facilities pose significant military and political risks, which has limited direct strikes even in actual wartime situations-thereby contributing to their "safety," according to the analysis.

Pro-nuclear trends are accelerating. In fact, even countries such as Germany, Italy, and Belgium-which had declared nuclear phase-outs-have begun to reconsider their policies to avoid energy dependence. German Minister for Economic Affairs and Energy, Katharina Reiche, stated last month, "The recent surge in oil prices due to the Middle East situation is weighing on economic recovery," and added, "The closure of nuclear plants was a huge mistake. Nuclear energy is desperately needed."

As a result, the value of "Team Korea," which possesses the entire nuclear value chain, is expected to rise. Researcher Lee emphasized, "Team Korea is the only player, and entering the North American large-scale nuclear power market will be an opportunity to prove our capabilities." He named Doosan Enerbility (target price: 1.4 million won) and KEPCO Engineering & Construction Company (target price: 2.4 million won) as related stocks.

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The power grid industry, which safely delivers generated energy without loss, is also heating up. The United States has approved large-scale investments to increase transmission voltages from the current 500kV to 765kV in response to rising electricity demand. Raising transmission voltage is akin to expanding a regular road into a ten-lane expressway, maximizing logistics efficiency.

NH Investment & Securities selected LS ELECTRIC (target price: 2.2 million won) and Sanil Electric (target price: 2.5 million won) as key beneficiaries. In particular, Sanil Electric is experiencing rapid growth as demand for specialized transformers for renewable energy grids increases, with next year's projected operating profit being revised upward.

Middle Eastern countries are also moving quickly. To avoid the "lifeline" of the Strait of Hormuz, they are prioritizing the construction of alternative pipelines bypassing through the Gulf of Oman or the Red Sea. Researcher Lee emphasized that "the core plant bases established by Korean construction companies through accumulated orders since 2010 geographically match the main targets hit in this war."

With postwar reconstruction costs estimated at approximately 18 billion dollars, there is an expectation that Korean construction companies will see an increase in orders in the Middle Eastern reconstruction market. This is attributed to the strong local construction track record of Korean firms, which gives them a competitive edge in project understanding. In particular, Hyundai Engineering & Construction (target price: 3 million won) is expected to normalize its performance on the back of nuclear power plant construction experience and reconstruction projects in the Middle East.

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If war has accelerated the pace of energy transition, the artificial intelligence (AI) boom is changing the form of energy itself. As the speed of data center investment has created a shortage of gas turbine supply, "ship engines" have unexpectedly emerged as an alternative. Engines once used primarily on ships are now becoming the heart that powers data centers, the brains of AI. Lee explained, "Due to the increased lead time for gas turbines, there is rapidly growing demand to use medium-speed ship engines as a power source for data centers."

Indeed, HD Hyundai Heavy Industries recently secured a contract worth 627.1 billion won to supply medium-speed engines for data center power generation to the US-based Aperion Energy Group. This demonstrates that ship engines are expanding beyond simple maritime equipment to become power infrastructure assets. HD Hyundai Heavy Industries' target price was raised to 8.6 million won, up 8% from previous estimates, reflecting the growth potential of its engine business.

Lee concluded, "Energy transition is expected to proceed rapidly, driven not only by environmental considerations but also by the added value of security. Investments to supply power for renewable energy and even ship engines will continue."

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