Growing Power Demand Pushes Trillions Toward Nuclear, but Financing Gaps Remain

Surging electricity consumption—driven in large part by artificial intelligence, data centers, and heavy industry—has revived global interest in nuclear power. Executives, investors, and policymakers gathered at the World Nuclear Association (WNA) symposium in London last week to assess how the sector can secure the capital needed for a new generation of reactors.

Demand Spike Sparks Renewed Attention

World Nuclear Association Director General Sama Bilbao y León told attendees that AI applications are “the canary in the coal mine” signaling a broader rise in energy requirements. Tech companies are already channeling funds into nuclear projects to guarantee round-the-clock electricity for data centers, and other sectors—from metallurgy to maritime shipping—are expected to follow.

That enthusiasm is reflected in financing projections. Morgan Stanley estimates that investment across the nuclear value chain could reach $2.2 trillion by 2025, up from a 2024 forecast of $1.5 trillion. The scale of spending raises questions about how much support governments, banks, and other institutions are prepared to provide.

One area attracting particular interest is the development of small modular reactors (SMRs). According to the International Energy Agency, SMRs promise shorter payback periods—roughly half the 20- to 30-year horizon typical for large plants. However, most SMR projects will not reach commercial operation until the early 2030s, and no U.S. utility has built a large-scale reactor in more than a decade.

Financing Hurdles for Large Reactors

While lenders are now more open to nuclear than in the past, risk tolerance remains limited. Mahesh Goenka, founder of advisory firm Old Economy, noted that many banks once avoided the sector entirely; today they engage cautiously, citing budget overruns, regulatory complexity, and lengthy construction timelines.

Such concerns are reinforced by recent cost escalations. In the United Kingdom, the proposed Sizewell C plant—designed to generate 3.2 gigawatts—has seen its price tag rise to £38 billion, nearly double the initial £20 billion target. The Vogtle expansion in Georgia ran years behind schedule, and its budget more than doubled. Hinkley Point C, also in the U.K., faces projected costs of roughly £40 billion.

Mark Muldowney of BNP Paribas told delegates that nuclear projects are “inherently political,” and pure project-finance structures are still years away. In his view, either governments or electricity consumers will shoulder a significant portion of the risk.

Public–Private Models Take Center Stage

Speakers repeatedly stressed the need for government backstops. Trevor Myburgh of South Africa’s Eskom argued that private capital alone “cannot be a silver bullet.” He and others pointed to China, where state-supported construction schedules have produced lower costs and faster delivery compared with many Western projects.

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Policy momentum is shifting in several countries. Earlier this year, U.S. President Donald Trump issued executive orders aimed at streamlining permitting and quadrupling America’s nuclear generating capacity by 2025. In Europe, the U.K. and France have embraced new build programs, though nations such as Germany and Switzerland remain cautious.

Beyond utilities, venture investors are scouting opportunities in companies supplying fuel, components, and digital tools. Investor Arfa Karani said a “hands-on” approach by the U.K. government is helping founders navigate the sector’s complex regulatory landscape. She added that rising geopolitical concerns over energy security are accelerating capital flows: “When nuclear becomes a matter of national security, previously unsolvable problems suddenly look solvable.”

Outlook: Appetite Grows, but Risk Must Be Shared

The WNA meeting underscored a paradox: escalating demand creates a compelling business case for nuclear, yet the technology’s high upfront costs still deter purely private funding. Delegates broadly agreed that blended financing—combining state guarantees with private investment—will dominate the next wave of projects until construction experience improves and SMRs prove their commercial worth.

For now, industry leaders expect the debate over who pays for new reactors to continue even as power-hungry sectors seek reliable, low-carbon electricity. How governments calibrate policy incentives and risk-sharing mechanisms will likely determine whether the projected trillions in investment materialize on schedule.

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Image credit: Bloomberg via Getty Images