Is nuclear energy making any real progress? Or is the hype cycle fizzling?
Towards the end of 2023 and into 2024, enthusiasm for nuclear energy was growing stronger by the week, it seemed, and the uranium spot price touched $100 per pound. The reason was a realization that electricity demand in the US would grow rapidly over the coming years after being stagnant for decades, that there was a need for firm power to counter the growing share of intermittent resources on the grid, and there was also political acceptance for nuclear from most corners of the political spectrum to an extent not seen in recent history. AI bosses were singing its praises and putting actual money into making deals. AI’s future was pushing nuclear’s future too. The spot price has since then come back down into the 60s and 70s, although it is still higher than pre-2023 levels. What happened? Is enthusiasm for nuclear fizzling away after the first excitement, or is there actual progress being made? Undersupply is a concern. However, the uranium spot price is also a proxy for market enthusiasm for nuclear.
Although you cannot feel the same enthusiasm as you could back then, there is real progress being made. But there has also been a realization that nuclear will play a part, but it will be slow to scale, and perhaps it’s not the technology immediately available to aid the expansion of AI. By the 2030s, when nuclear might become available at larger scale and become a more scalable product, AI would have transformed our lives quite substantially.
Policy-side progress
World Bank
The World Bank recently decided to lift its ban on providing funding for nuclear energy projects. It would, in collaboration with the IAEA, fund projects that help extend the life of existing reactors and support grid infrastructure, as well as support the development and deployment of SMRs.
The World Bank’s changing view and policy stance is due to the changing views of many of its member countries that for many years had been staunchly anti-nuclear. For example, Germany’s new government recently decided not to stand in the way of nuclear energy development in the EU. It has indicated it would have no objections to France’s efforts to ensure that nuclear power is treated on par with renewables as a low-carbon energy source in EU policy. Other EU members are also slowly changing their tone on nuclear, like Denmark, which had a ban on nuclear power in the country for 40 years. Nordic countries Sweden and Finland are already supporters. Advances in nuclear power, especially SMRs that would incorporate advanced safety features and be easier to manufacture, have been a driving force behind the changing views in many nations that had previously been opposed to nuclear. A rapidly growing electricity demand and the issues that have emerged from over-reliance on a renewable-only grid have also contributed to the changing view. In the EU, the question of energy security is also front and center in the minds of many policymakers since the Russian invasion of Ukraine and the tumultuous natural gas supply situation several countries in the EU have found themselves in.
US decisions
If there is growing enthusiasm in the EU, that is still somewhat outshined by the enthusiasm in the US. President Trump recently signed four executive orders in order to push the industry and the regulators to increase the speed of decision-making and make it easier for the construction of new nuclear power plants. There is genuine support across the board for making it easier for the industry to construct new plants and to attract new investments. The current administration sees nuclear energy capacity growing from 100 GW to 400 GW over the next 25 years. To that end, there will be much faster approval for new reactors. AI data centers will be treated as critical defense facilities and therefore find it easier to be powered by advanced reactors. Dependence on foreign sources for nuclear fuel is also to be reduced, and there will be more support for mining, enrichment, conversion, and even recycling and reprocessing of nuclear fuel (including HALEU) in the US. Apart from the domestic effort, there is going to be more support offered to export nuclear energy technology to friendly nations.
In just two years, the policy environment and public acceptance for nuclear energy has starkly changed. The current environment feels so different from the pre-2020 era. And real policy changes mean that things are moving along. And the reversal from 10 years ago is unprecedented. The only concern is whether such actions—taken by presidential executive order—would mean lasting change. And it feels like it will be lasting, given there is positive support for nuclear from even those who had been the most anti-nuclear in the past. Public acceptance is another thing. And here also there is a stark difference from 10 years ago. This suggests that even though executive orders give a whiff of the temporary, these actions are more or less going to be of the permanent sort.
Private sector progress?
Westinghouse is praising its ability to develop large reactors like the one it did at Vogtle and is hoping to develop the 10 reactors that the government is aiming to start construction on before 2030. SMR developers also feel that they can fully compete with any large reactor builder by siting multiple units on the same site. For example, 12 of NuScale’s 77 MW reactors or 4 of Holtec’s 230 MW reactors can equal one 1 GW large reactor. The benefit of SMRs over large reactors is that more of the construction can take place in factories vs. on-site. And it would be more modular, requiring more quantities of smaller parts, which plays into cost reduction achieved from scaling the production. And this is obviously not lost on many investors.
SMR developers have raised over a billion dollars in funding recently. And these are not unsophisticated small investors but investors like Citadel that would not have invested unless they saw a real possibility of generating above-average returns on their investments. Hyperscalers like Amazon and Google have made real deals with these SMR developers, a few of which are working on really quite futuristic designs that we have never seen in the nuclear fission business outside laboratories—and perhaps that too only before the 1970s.
Recently, even the old reactors have received new lifelines. Last year, it was Microsoft’s 20-year deal to reopen the Three Mile Island nuclear plant. Last month, the news was centered on Meta’s 20-year deal for Clinton Nuclear Power Plant in Illinois, allowing the plant operator to boost output by building another reactor.
And this activity from both private and public sectors points to real action and real deals being made—and real progress happening in the nuclear industry. But why is it happening now? One has to put it down to two factors: the rising interest in AI and the realization that electricity demand will grow quite quickly, and a renewable-only grid will be vulnerable. That vulnerability can only be dealt with by investing in more firm power. Just before the election, one only heard about nuclear. Now, when it comes to firm power and rising electricity demand, natural gas is also increasingly coming into the picture.
The increasing acceptance of nuclear energy among the public today could have another underlying and deeper cause. At a more psychological level, nuclear’s rising acceptance could be attributed to the rise in other major risks—the kind associated most with human extinction. Such as environmental factors—foremost among them the rising risk of runaway global warming. Or epidemics—whether from a naturally evolved superbug or one manufactured in a lab. Risks posed by artificial superintelligence that would seek to replace human beings are also not far from our minds these days. These are also the topics of choice when it comes to portraying the end of the world in movies today, just as nuclear armageddon used to be in the 1990s. But these other risks have come to the forefront for the current generation, which is why nuclear might have become more accepted. And lets not forget that it is sometimes seen as a possible solution to solving some of our problems too.