RBC Capital Markets says investors may be overlooking one of TC Energy's most valuable holdings: its 48% stake in Bruce Power, a nuclear power operator in Ontario that could generate steady cash for decades.
After attending a Bruce Power investor event, RBC argued that the nuclear stake strengthens TC Energy's profile alongside its natural gas pipelines. The appeal lies in the revenue structure: Bruce Power can deliver contracted cash flows through 2064, with limited exposure to fuel-price swings, waste costs, or demand surprises because pricing and volumes are largely set in advance.
Why Nuclear Power Is Gaining Attention
Nuclear power plants run continuously, regardless of weather or time of day, making them a reliable source of baseload electricity. This 'always-on' generation is becoming more valuable as electricity demand climbs, driven by the growth of data centers and artificial intelligence.
AI workloads require massive amounts of power, and tech companies are increasingly looking for clean, reliable sources. Nuclear power fits that bill, as it produces no carbon emissions during operation. This trend has boosted interest in nuclear assets across the energy sector.
Bruce Power is one of the largest nuclear operators in North America, supplying about 30% of Ontario's electricity. Its long-term contracts with the Ontario government provide predictable revenue, insulating it from the price volatility that affects natural gas and coal plants.
What It Means for TC Energy Investors
For TC Energy, the Bruce Power stake offers a counterbalance to its core pipeline business. Pipelines face regulatory hurdles and shifting energy policies, while nuclear power benefits from government support for clean energy and energy security.
RBC's analysis suggests the market may not be fully pricing in the value of this stake. Contracted cash flows through 2064 provide a level of visibility rare in the energy industry, where commodity prices and demand can swing wildly.
The timing is notable. As energy stocks rally on oil price surges, investors are also watching for long-term, stable income streams. Nuclear assets offer that stability, though they come with high upfront costs and regulatory oversight.
Broader Market Context
The nuclear power sector has seen renewed interest as governments and corporations seek to meet climate goals while ensuring reliable electricity. In the U.S., the Biden administration has supported nuclear plants through tax credits and loan guarantees. Canada has also embraced nuclear as part of its clean energy strategy.
This trend extends beyond TC Energy. Other companies with nuclear exposure, such as utilities and infrastructure funds, have also seen increased attention. The energy transition is drawing significant capital, and nuclear is increasingly seen as a key component.
However, nuclear power is not without risks. Construction delays, cost overruns, and regulatory changes can affect profitability. Bruce Power's existing reactors are already operational, reducing some of those risks, but investors should still consider the sector's long-term challenges.
What to Watch Next
Investors will be watching for updates on TC Energy's broader strategy, including any plans to monetize or increase its stake in Bruce Power. The company has been selling assets to reduce debt and focus on its core pipeline network.
RBC's note suggests the nuclear stake could become a bigger part of the investment narrative, especially if AI-driven power demand continues to grow. For everyday investors, the key takeaway is that TC Energy offers exposure to both traditional energy infrastructure and a growing clean-power segment.
As always, it's important to consider how any investment fits into a diversified portfolio. Nuclear power's steady cash flows can be attractive, but they are just one piece of a larger puzzle.
