How investors weigh risks amid surge in nuclear demand

LONDON – A surge in electricity demand has rekindled interest in nuclear energy, but the vast capital requirements and an uncertain political and regulatory climate have raised questions about the sector’s financial capabilities.

The tech giant is investing in nuclear energy investments, powering energy-intensive data centers, and achieving AI ambitions.

AI and data centers are “coal mine canaries,” Sama Bilbao y Leon, director of the World Nuclear Association, told CNBC ahead of the meeting. “We are ultimately aware that there will only be an increase in general electricity and energy demand. But the reality is that every sector of the economy needs more electricity.”

In addition to AI, applications range from the nuclear energy of the metallurgical industry, which aims to electrify as fast as possible, to the chemicals, maritime and shipping sectors, Leon said.

Last week, the question of how to meet the global growth rights needs became central as the world’s largest uranium energy company, expert and investor chief executive officer, bringing together the world’s largest uranium energy company, expert and investor at the Royal Lancaster London Hotel.

Leon, who began discussions at the meeting, told attendees in a welcoming speech that the event was a “working summit” that was just about to go past a conversation.

Morgan Stanley estimates that investment in the nuclear value chain through 2025 is projected to rise from 2024’s forecast of $1.5 trillion. That level of investment raises questions about the role of governments, banks and other financial players in providing adequate financial capabilities.

Nuclear energy is said to provide a more reliable, 24/7 energy source. This could be more intermittent. The development of small modular reactors (SMRS) offers a more scalable power solution due to the size. According to the IEA, the payback period for SMR investments is half the usual 20-30-year period for large-scale projects.

However, SMR has not yet reached the commercial stage, and most planning projects will not be online until 2030. A significant amount of money has been pledged, but there have been no new, large-scale nuclear projects in the United States over the past 15 years.

“The first positive talk about the financial sector regarding nuclear weapons is that they are open to nuclear funding,” Mahesh Goenka, founder of Old Economy, a market and commercial advisory firm, told CNBC about the WNA bystanders. “That wasn’t a story about a few years ago when many banks didn’t want to touch on nuclear projects. That’s changed. Now the question remains: do they have the risk appetite to fund nuclear projects?”

Challenges include past budgets, project delays due to long construction lead times, technical complexity of initiatives, and difficulty in obtaining licenses.

Goenka compared the western part to China. There, financial institutions are funding nuclear projects because they can provide nuclear projects within time and budget. Meanwhile, the West has not built many new reactors for a very long time, so there is no learning rate yet, he said.

Almost all of the US’s nucleation capabilities came from nuclear reactors built between 1967 and 1990, and there was no new construction until 2013, when work began on the Vogtle unit in Georgia. Meanwhile, the last factory built in the UK was Sizewell B, which began operation in 1995.

“We are committed to providing energy, resources and infrastructure at BNP Paribas,” said Mark Maldany, Managing Director of Energy, Resources and Infrastructure. He said that clients are much more open to investments, but there remains uncertainty about costs and construction times.

“We have been away for years from a situation where we can use our own technology like project finance to fund large-scale nuclear (projects),” he said in the panel discussion.

“It won’t become a contractor. Even if they are willing and generally not, they will be bankrupt by some of the risks of sitting on these projects. So it will become a government or it will become a power consumer in that country and be mediated by utilities.”

Nuclear power plants are one of the most capital-intensive assets. For example, the UK is lit green as it builds a large two-reactor nuclear power plant that generates 3.2 gigawatts of electricity on the Suffolk Coast. However, the cost of the government-owned majority project jumps to £38 billion, exceeding the initial target of £20 billion.

Other major projects face similar issues. The plant in Waynesboro, Georgia, ran its schedule several years behind and had a budget that more than doubled during development. Nuclear Point in the UK faced a budget that had risen to an estimated £40 billion, facing many concerns about security risks in the early stages.

Trevor Myburgh, a senior executive at Eskom’s corporate finance advisory, stressed that the private sector will become a “silver bullet” and will not be able to solve the problem of financing nuclear energy.

In a panel discussion on Wednesday, Myberg said that the private nuclear partnership would be “important” especially in the development of emerging economies.

Although it currently bans the construction of new nuclear power plants, some European countries such as Switzerland, which have drafted laws to lift the motion, are still at a disadvantage with nuclear energy, while other governments such as the UK, France and the US remain at a disadvantage.

Earlier this year, US President Donald Trump signed numerous executive orders designed by 2025 to quickly track the development of nuclear reactors and quadruple nucleation capabilities.

Such actions from the Trump administration place a positive nuclear energy policy “on steroids,” said Scott Melby, CEO of Uranium Royalty.

“What we’re looking at is not just building small modular reactors, advanced nuclear reactors, large-scale nuclear reactors, but also buildings for the fuel cycle () fuel cycle, but we’re actually taking concrete steps,” Melbye told WNA participants.

Investor Arfa Karani noted that the growing interest from the investor community is particularly sought to find opportunities with startups supplying nuclear adjacent technologies.

In particular, the UK government is taking a more “practical” approach to help founders understand how to invest in clean technology, she said.

“Regulations need to understand themselves. Isn’t it no longer a question of where to get capital? … Now it’s a matter of national security, global power and global domination,” she told CNBC, adding that AI and nuclear commitment “means that all the issues of intolerance suddenly become very exciting for the nuclear.”