The market, technology and policy foundations are in place for a new era of growth in nuclear energy over the coming decades. Demand for electricity is rising fast, not only for conventional uses such as light industry or air conditioning, but also in new areas such as electric vehicles, data centres and artificial intelligence. Electricity use has increased at twice the rate of total energy demand over the past decade and is set to extend this lead as the world enters a new Age of Electricity. Nuclear is a clean and dispatchable source of electricity and heat that can be deployed at scale with round-the-clock availability. It brings proven energy security benefits to electricity markets as well as reductions in emissions, complementing renewable energy. Interest in nuclear energy is at its highest level since the oil crises in the 1970s: support for expanding the use of nuclear power is now in place in more than 40 countries. Moreover, innovation is changing the nuclear technology landscape, including many small modular reactor (SMR) designs under development; the first commercial SMR projects are set to start operation around 2030.

Generation from the world’s fleet of nearly 420 reactors is on track to reach new heights in 2025. Even as a few countries phase out nuclear power or retire plants early, global generation from nuclear plants is rising as Japan restarts production, maintenance works are completed in France, and new reactors begin commercial operations in various markets, including China, India, Korea and Europe. Nuclear power produces just under 10% of global generation and is the second-largest source of low-emissions electricity today after hydropower.

Some 63 nuclear reactors are currently under construction, representing more than 70 gigawatts (GW) of capacity, one of the highest levels seen since 1990. In addition, over the last five years, decisions have been taken to extend the operating lifetimes of over 60 reactors worldwide, covering almost 15% of the total nuclear fleet. A new multi-country initiative was launched that aims to triple global nuclear capacity by 2050, recognising the role of nuclear energy in reaching energy security and climate goals, complementing the leading role played by renewables. Annual investment in nuclear – encompassing both new plants and lifetime extensions of existing ones – has increased by almost 50% in the three years since 2020, exceeding USD 60 billion.

For the moment, the renewed momentum behind nuclear power is heavily reliant on Chinese and Russian technologies. Of the 52 reactors that have started construction worldwide since 2017, 25 of them are of Chinese design and 23 of them of Russian design. Highly concentrated markets for nuclear technologies, as well as for uranium production and enrichment, represent a risk factor for the future and underscore the need for greater diversity in supply chains. 

A shift in market leadership is underway: half of the projects that are under construction today are in China, which is on course to overtake both the United States and European Union in installed nuclear power capacity by 2030. Advanced economies are still home to most of the world’s nuclear fleet, but these reactors are relatively old; their average age is more than 36 years, twice the average elsewhere. Rejuvenating this fleet has not been easy: the nuclear industry in long-time market leaders, such as the United States and France, has struggled in recent years with project delays and cost overruns for all new large-scale reactors. 

A brighter outlook for nuclear power can be unlocked, as regional outcomes vary widely in a scenario based on today’s policy settings and market dynamics. In advanced economies, the rise in SMRs and new construction of large-scale reactors only just offset the effects of an ageing fleet, meaning that capacity is slightly higher in 2050 than today. In the European Union, the share of nuclear power in the electricity mix peaked at 34% in the 1990s but has already fallen to 23% today and continues to fall steadily in this scenario. By contrast, in China, installed capacity more than triples to mid-century, and it also doubles in other emerging and developing economies.

Cost-competitive SMRs, boosted by government support and new business models, can help clear the path to a new era for nuclear energy. Demand for firm, dispatchable and clean power from the private sector is a major driver of interest in these emerging technologies, and there are plans of varying maturity for up to 25 GW of SMR capacity, in large part to meet growing electricity demand for data centres. Under today’s policy settings, total SMR capacity reaches 40 GW by 2050, but the potential is far greater. In a scenario in which tailored policy support for nuclear and streamlined regulations for SMRs align with robust industry delivery on new projects and designs, SMR capacity is three times higher by mid-century, reaching 120 GW, with more than one thousand SMRs in operation by then. This rapid growth scenario would raise required investment in SMRs from less than USD 5 billion today to USD 25 billion by the end of this decade, with cumulative investment of USD 670 billion by 2050

If construction costs for SMRs are brought down over the next 15 years to parity with large-scale reactors built on budget, this could see the cost-effective uptake of SMRs increase by a further 60%, with deployment reaching 190 GW by 2050. This trajectory for cost reductions – to USD 2 500/kW of capacity in China and USD 4 500/kW in the United States and Europe by 2040 – is faster than we have in our main scenarios but less ambitious than the cost levels being targeted by today’s SMR project developers. Cumulative global investment in SMRs in this case totals USD 900 billion to 2050.

The rise of SMRs, alongside a new wave of large-scale reactors built on time and on budget, can open the possibility for Europe, the United States and Japan to reclaim technology leadership. In a rapid growth scenario, nuclear capacity in advanced economies grows by over 40% to 2050, helping to meet energy security and emissions goals. The share of large-scale nuclear construction starts using designs from advanced economies rises from less than 10% in recent years to 40% by 2030 and over 50% thereafter, spurred by new projects in Europe, the United States, Japan and Korea. The widespread deployment of SMRs reinforces this trend, with over half of new construction starts to 2050 using designs from the United States or Europe. A more competitive and diverse market brings broad benefits for countries seeking to step up deployment of nuclear technologies. 

Greater diversity of uranium supply and enrichment services is essential for a secure and affordable expansion of the nuclear sector. Uranium production is highly concentrated in four countries, which jointly account for more than three-quarters of global uranium production from mines. Enrichment capacity is also highly concentrated, with more than 99% of the enrichment capacity in four suppliers, with Russia accounting for 40% of global enrichment capacity. This area needs to be given much greater attention, particularly for countries that import enriched uranium. 

A rapid growth scenario requires a major expansion in annual investment, which doubles to USD 120 billion already by 2030. Nuclear projects have traditionally been hard to finance due to their scale, capital intensity, long construction lead times, technical complexity and risk liability in some countries. This has meant heavy involvement of governments, and typically a major role for state-owned enterprises (SOEs) as owners and operators of nuclear plants. SOEs can often obtain large amounts of financing at relatively competitive rates, close to those of sovereign entities

Public funding alone will not be sufficient to build a new era for nuclear: private financing will be needed to scale up investments. However, the long timelines for permitting and construction make nuclear a tough proposition for commercial lenders, as they can push the breakeven point for a new large reactor to 20-30 years after the project start. These factors also limit the use of project finance structures, which are often used to support other large infrastructure projects.

Reducing the risk of cost overruns and delays is a prerequisite for expanding finance, both public and private, and protecting the interests of consumers. This requires a multifaceted approach. Adopting well-established reactor designs and then building them in series can greatly help to build up capacity, supply chains, and a strong and skilled workforce. Standardisation allows for a streamlined construction process, reducing the time and cost associated with building each reactor, and lowering costs over time through learning. 

The predictability of future cash flows is key to bring down financing costs and attract private capital to the nuclear sector. Financial institutions lend based on reliable future cash flow expectations, so a supportive regulatory framework that increases visibility, including limiting liabilities, in this area is crucial for debt financing. In markets with volatile prices, de-risking instruments such as long-term power purchase agreements, contracts for difference and regulated asset base models are indispensable. Long-term power purchase agreements can also be underwritten by large consumers, who can lock in future supplies of electricity at average cost. These arrangements can also open the door to proven commercial financing instruments, such as green bonds, supported by accommodating regulations and taxonomies.

SMRs can dramatically cut the overall investment costs of individual projects to levels similar to those of large renewable energy projects such as offshore wind and large hydro. This makes SMRs less risky for commercial lenders, once first-of-a-kind projects are established and technologies are proven. The more modular design of SMRs significantly cuts construction times, with projects expected to reach cash flow break-even up to 10 years earlier than for large reactors. The strong credit rating of the technology players behind data centres can also facilitate financing for SMR projects targeting this sector. 

Governments have a unique capacity to provide the strategic vision, and the policies, incentives and public finance that can move the nuclear sector forward. Not all countries see a role for nuclear technologies, and nuclear power is only one of multiple fuels and technologies that are required globally for a safer and more sustainable energy future. But nuclear can provide services and scale that are difficult to replicate with other low-emissions technologies. Taking advantage of this opportunity requires a broad approach from governments, encompassing robust and diverse supply chains, a skilled workforce, support for innovation, de-risking mechanisms for investment as well as direct financial support, and effective and transparent nuclear safety regulations, alongside provisions for decommissioning and waste management. There are multiple signs pointing towards a new era for nuclear; the task now is to build it.