Given the unprecedented rise in power demand over the next few decades, nuclear power can no longer be ignored. Yet investing in nuclear is fraught with risks and requires a careful approach. This article explores the case for nuclear power and how to prudently invest in this renaissance.
Nuclear has the advantage of being a clean and stable source of base power. It is not geographically restricted and, most importantly, offers the highest capacity factor of all sources of energy. A capacity factor measures the stability of power by looking at average actual output compared to the maximum possible output. Nuclear reactors have a capacity factor of around 94%. This is well above wind, 35%, and even other sources of stable power like natural gas, 57%.
The checkered perception of nuclear power is being slowly dispelled. The world’s leading technology firms are starting to validate this technology, as they race to power AI infrastructure. Microsoft is paying to recommission one of the Three Mile Island nuclear reactors1 while Meta2, Amazon3, and Google4 are building data centres and contracting directly for nuclear power.
Nuclear enjoys bipartisan support. The Biden Administration unveiled plans to triple nuclear power capacity by 2050, deploying 200 GW of nuclear energy5. Congress passed several acts over the past decade, including the Nuclear Energy Innovation Capabilities Act (September 2018) and the ADVANCE Act (July 2024).
The Trump Administration is especially supportive of nuclear power. Trump has issued four nuclear related executive orders6 including “Reinvigorating the Nuclear Industrial Base” and “The Reform of the Nuclear Regulatory Commission”. These are aimed at streamlining regulation, supporting new technologies and leading to more nuclear energy to meet rising needs.
According to the International Atomic Energy Agency outlook, high-case scenario nuclear capacity globally is set to more than double (2.6x) by 2050 – a figure that has been adjusted higher and higher with each report7. Morgan Stanley estimate that this could see $2.2 trillion of investment across the nuclear value chain through 2050, up from $1.5 trillion initially forecast8. To fund this investment there is an increasing commitment from leading financial institutions9, another sign of validation.
By 2050, the US alone is estimated to spend $350bn on nuclear reactors, with strong growth starting towards the end of the decade.
Aside from existing large scale nuclear reactors, technology has accelerated the development of smaller modular reactors (SMRs). SMRs are safer to operate, take up less real estate, and, most importantly, they can be turned on and off unlike conventional reactors. Companies like Oklo, backed by Open AI pioneer Sam Altman, are building fast fission reactors that can generate 15 MW of power for a decade without refuelling. Prototype SMR’s are being constructed and developed by Terra Power, founded by Microsoft founder, Bill Gates and NuScale, a subsidiary of Fluor, that designs and markets SMRs. Google and Oracle10 are committing to the technology. While commercial availability of SMR units is not expected for 10 years, the amount of investment and intellectual capital being committed in this area is likely to shrink this window.
Though nuclear energy growth is compelling as investors, it is important to approach this growth carefully. Huge regulatory burdens and technical barriers mean that new technologies, while exciting, will take upwards to a decade before they see commercial potential. Taking technology risk while investing in unprofitable companies, such as Oklo or Nano Nuclear Energy, can be a risky long term investment strategy.
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