Money starts flowing back into nuclear power after long exile

Source : Sustainable Views: Money starts flowing back into nuclear power after long exile https://www.sustainableviews.com/money-starts-flowing-back-into-nuclear-power-after-long-exile-2d4e5cff

By Florence Jones and Elizabeth Meager

From US policy shifts to Microsoft power deals, a sector long seen as overly risky is edging back into the mainstream

After decades on the sidelines, nuclear power is enjoying an unexpected revival in the US — on paper at least. While new projects are largely yet to materialise, strong policy support, corporate demand and investor interest are reshaping sentiment.

While the private sector is becoming more comfortable with the energy source, nuclear power investment remains largely the mainstay of governments, including in the US.

The Joe Biden administration’s Inflation Reduction Act provided tax credits for nuclear power plants at varying stages of development.

And while the Trump administration has torn up much of the IRA’s support for wind and solar power, it has been overtly supportive of nuclear energy, leaving most IRA incentives in place. Jarrod Agen, director of the Energy Dominance Council — an advisory group created by the president in February — has said President Trump supports nuclear power because it is “more American” than wind and solar.

Meanwhile, in June, the World Bank lifted its 60-year ban on financing nuclear projects, and hyperscalers such as Amazon, Google, Meta and Microsoft have committed billions in funding for nuclear build-outs to fuel growing data centre power demand.

“The green transition stands no chance without significant scaling of nuclear energy production” Sondre Myge, Skagen Funds

Three Mile Island, a Pennsylvania reactor involved in the US’s worst nuclear accident in 1979, is set to restart operations in 2027 after its owner signed a $3bn, 20-year power purchase agreement with Microsoft.

And in March, the government provided an initial $57mn of an up to $1.52bn loan guarantee to reopen retired nuclear plant Palisades in Michigan, which closed in 2022. The loan had been granted during Biden’s tenure.

Loan guarantees do not provide cash upfront, but they give private lenders confidence to finance projects on more favourable terms. This is particularly important for nuclear, given historic cost and timeline issues.

But while the US government has licensed extended lifetimes for seven of its 94 operable nuclear plants, it has no new reactors under construction.

Speaking in Brussels last week, US energy secretary Chris Wright made the case for small modular reactors and the need for nuclear as a “high value energy” that can function 24/7 and can produce the high process heat necessary to produce silicon for wafers used in semiconductors, for example. Energy sources dependent on the weather were deemed “low value”.

“The idea for next generation nuclear is to build it in a factory and assemble it quickly,” said Wright. “The first [SMRs] won’t be cheap, but if we build them in volume, they can become cheap.”

Finance gets excited

Shifting policymaker sentiment has combined with industry innovation to tackle project delays and safety issues, prompting an about-turn on nuclear power, Global X ETFs investment strategist Matt Lodge tells Sustainable Views.

“All this, paired with broad recognition that we have an acute need for power to enable the [artificial intelligence] build-out and general electrification of markets, have put nuclear’s prospects in good stead,” he says.

“Markets have reacted strongly to these developments as the capital and commitments flow in, and companies across the nuclear value chain have performed strongly.”

Sondre Myge, head of ESG at Skagen Funds in Norway, says these investments are simply “pragmatic” because “the green transition stands no chance without significant scaling of nuclear energy production”.

This is because policymakers are not investing enough in grid utilisation and low-carbon baseload power at system level, he explains.

“The green transition has thus far been an energy addition due to significant growth in demand,” Myge says. “Scaling wind and solar can alleviate some [demand, but] it will not cover the need for growing power supply over the coming decades.”

PPAs with hyperscalers, particularly in the US, have been “a significant attraction for investors” as they “secure long-term revenue streams on stable baseload power”, he tells Sustainable Views.

In September 2024, a group of 14 banks and investment managers signalled that they would increase financial support for the nuclear power industry to aid the COP28 goal of tripling global nuclear capacity by 2050.

With electricity demand projected to surge, hedge funds are also investing heavily in nuclear power equities, a Goldman Sachs analysis found. Two US-headquartered nuclear power providers entered the bank’s “hedge fund VIP list” of money managers’ most popular long equity positions in the third quarter of 2024.

Generation on the up

Nuclear reactors generated a record amount of energy — 2,667 terawatt hours — in 2024. That surpasses the previous peak of 2,660TWh in 2006 and marks the first new record in nearly two decades, shows data from trade body the World Nuclear Association’s 2025 performance report published in early September.

Overall growth is being pushed by an “acceleration in output” and a fall in the number of reactors coming offline, WNA senior programme lead for climate Jonathan Cobb tells Sustainable Views.

He predicts that year-on-year growth in nuclear electricity generation will continue “every year”.

However, Mycle Schneider, energy analyst and co-ordinator of the annual World Nuclear Industry Status Report, says it is too soon to draw long-term conclusions from the 2024 data.

He highlights that the record is a modest increase of 7TWh difference between 2024 and 2006. Only 11 countries are building nuclear plants, down from 13 as of mid-2024 and 16 as of mid-2023, he adds.

Meanwhile, renewables generated three times more electricity globally in 2024 than nuclear, and attracted considerably more investment.

According to the International Energy Agency, nuclear power developers raised around $80bn globally in 2024, while investors poured roughly $500bn into solar panels in the same period.

Big tech’s nuclear moment

In the same week it released its industry report, the WNA announced that tech giant Microsoft had become the group’s newest member.

Microsoft is the first tech member to join the association, Cobb says. The other WNA members are largely energy companies, utilities, mining businesses and consultancies.

Microsoft, Amazon, Google and Meta have all announced offtake agreements with nuclear developers, with a focus on SMRs that are designed to be easily replicable but are yet to be developed at scale.

“Nuclear reactors don’t get built because a president signs an order or big tech signals interest — it is the utilities that drive this market”

Mycle Schneider, World Nuclear Industry Status Report

SMRs are quicker to bring online and better suited to the tech industry, but they still come at a premium over wind and solar — particularly when it comes to insurance, says Fraser McLachlan, chair of green insurance platform Tokio Marine GX.

“We’ve got good data on how wind and solar perform, but when you get into newer territories like SMRs, you naturally need to charge a premium for those sorts of risks,” he tells Sustainable Views.

Besides, tech companies turning their attention to nuclear power is unlikely to have influenced the 2024 electricity generation record, explains Cobb.

The median build time for a nuclear reactor is six to seven years, which does not including the planning period beforehand, he says. Given that energy demand from data centres is “relatively new”, it is more likely that the nuclear reactors which came online in 2024 were due to energy security or climate concerns from governments and based on decisions taken many years ago.

Schneider cautions that the success of nuclear in the US will ultimately come down to market dynamics rather than presidential whims or big tech agreements. “Nuclear reactors don’t get built because a president signs an order or big tech signals interest — it is the utilities that drive this market,” he says.

The Trump administration has been more than willing to exercise its extraordinary influence over energy markets, but that influence has its limits, adds Schneider. Federal policies can shift sentiment, but utility investment decisions are what will truly move the market, he says.

Even so, these tech company agreements give investors confidence that nuclear power can deliver reliable long-term revenues, says Myge.

And while it will be years before these agreements translate into new electricity on the grid, they represent a crucial shift in sentiment towards nuclear power. For now, however, the US nuclear revival remains mostly just lines on a spreadsheet.

Additional reporting by Philippa Nuttall.

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