Sustainable Energy - August Commentary

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Nuclear power has risen to prominence in both policy-making and public discourse over the last 12 months in response to rising electricity demand, the need for stable zero-emission baseload, and technological innovation. In this note, we present the state of nuclear energy globally in 2025 and outline the moderate increase in its expected contribution to global electricity output by 2050. We summarize the issues with newbuild nuclear deployment and make the case for life extension as an increasingly viable option for asset owners. Emergent technologies (including small modular reactors) present an appealing solution but remain uncommercial. We conclude by presenting a number of routes to invest in the nuclear end market.

The state of nuclear in 2025

The International Energy Agency (IEA) reports that there were 410 nuclear reactors in operation globally with a combined capacity of 416 GW at the end of 2023, satisfying 9% of global electricity demand. Although spread across 30 countries, nuclear generation capacity is concentrated in the hands of the top five players: the USA (24%), France (15%), China (14%), Russia (7%) and South Korea (6%). While our June 2023 commentary focused on the technology, distribution and economics of nuclear generation, this report will provide a refreshed outlook for the nuclear industry.

Nuclear capacity has remained almost stagnant over much of the last decade, growing around 0.5% per annum. In context, global electricity capacity has grown by around 4.7% per annum over the same period, with solar and wind materially outgrowing this global average. This loss of share for nuclear has been the consequence of a cooling of regulatory and public support for the technology following the Fukushima incident in Japan, coupled with the legacy fleet of reactors in developed markets being withdrawn from service on reaching retirement age (35-40 years old).

However, the outlook for nuclear has somewhat brightened in 2024 and 2025 owing to a greater demand outlook for electricity, improving sentiment on the part of policymakers and the public, and technology innovation. Total deployment is expected to reach 650GW by 2050 under the IEA’s STEPS scenario, which represents the latest stated policy ambitions. While this growth rate of 1.8% per annum will still lag that of total electricity growth (2.8% per annum), it represents a significant step up from the stagnation of the previous decade and invites us to consider its drivers.

A refreshed case for nuclear: low-emission, uninterruptible power to satisfy rising power demand

Three factors are causing the improved outlook for nuclear capacity deployment.

• The first is the sharp acceleration in demand for electricity which has occurred in the last 12-24 months. This has been driven by innovation in AI, with data centres demanding significant incremental power volumes. Global electricity demand growth expectations have grown to around 4% per annum between 2025-27, a marked increase from the 2.8% growth demanded between 2000 and 2023.
• The second driver is the ongoing shift towards cleaner power, as countries seek lower-emission alternatives such as renewables with battery storage to meet their decarbonization targets. Nuclear is equally capable of delivering zero-emission power and is the second largest source of emission-free generation after hydropower. Its return to favour among policymakers follows a decade of introspection following the Fukushima incident (2011) and is driven by a desire to seek sources of zero-emission baseload power, which wind and solar cannot provide
• This leads to a natural third driver, which is the continual delivery of nuclear power. Once a reactor is operational, it will continue to produce power for the duration of its asset life. This makes it not only a viable candidate for baseload, as mentioned, but also in specialized applications such as powering data centres.

New traditional nuclear plants remain costly; extending existing assets is an increasingly appealing option

Traditional nuclear plants (with over 1GW capacity) have been notoriously difficult to deploy in large volumes globally, owing to two rigidities. The first is build time, with most taking 6-12 years to construct in developed markets (excluding the time taken to select sites and gain regulatory approval). The lack of newbuild nuclear activity has materially eroded the supply chain in the developed world, meaning that there has been little, if any, efficiency gain in newbuild construction over the last 20-30 years. Moreover, the long build times often face unplanned delays, bringing financing difficulties (as financiers desire interest payments during construction) and significant power price risk and volatility.

The second issue is the sheer economic cost of nuclear power, which remains largely uncompetitive versus alternative technologies. In the US, for example, the levelised cost of electricity (LCOE) of nuclear is at least five times that of onshore wind and solar, and more than two and half that of offshore wind.

Traditional nuclear remains uncompetitive on LCOE cost metrics

Source: BloombergNEF, 2025

In spite of these hurdles we note that new reactors are being sanctioned and there are 61 currently under construction. This fleet is set to come online between 2025-32, with nearly half of these located in China. We note that remarkably few are being built in developed markets; with only two in the UK (Hinkley C, 1 & 2), and one in Japan. There are a further 85 reactors in the planning stage around the globe, again, with the vast majority of these located in Asia. While we do not expect this entire planning pipeline to materialize, the under-construction and planned opportunity set represents 15-35% of the installed base of 410 reactors today.

Newbuilds must be considered in the context of the ageing of the existing fleet, of which 180 (43%) are above the age of 40 years and are therefore reaching the end of their lifespan intended at the time of construction. Although many of these reactors will be retired, we note that regulators are increasingly approving the ‘life extension’ of reactors. Extending an existing nuclear asset’s life removes the two hurdles of traditional newbuild nuclear mentioned above, ‘time to power’ and poor economics. The IEA estimates that on an LCOE basis, nuclear lifespan extension is akin to that of utility solar / onshore wind; thus substantially more economical than newbuild.

During the past five years, lifetime extensions have been announced for 64 reactors in 13 countries, with a total capacity of about 65 GW (15% of current global nuclear fleet capacity). The most notable of these are summarized by country below. Further, we have seen some evidence of technology firms issuing purchase power agreements (PPAs) to dormant nuclear facilities, to encourage their restart and secure power offtake. Two such examples are Microsoft’s PPA with Constellation Energy for the restart of the Three Mile Island plant and Amazon Web Services’ plan to sign a PPA with Talen Energy for life extension and potential capacity expansion at its Susquehanna plant.

Source: IEA, 2025

Small Modular Reactors are a fledgling technology, attracting interest from tech firms

Small modular reactors (SMRs) are an emerging technology that holds the potential to overcome the build time and cost hurdles of traditional new nuclear plants. The goal of SMRs is simple: make nuclear plants smaller, standardised, quicker and cheaper to build. Promoters of SMRs make the following claims:

• Smaller – Smaller reactors would be between 50-500MW compared to conventional reactors at 800-1,000MW or more. At this size, SMRs could be built on brownfield sites to replace decommissioned coal-fired plants, 90% of which are under 500MW.
• Standardised – Manufacturing standardised components should allow SMR construction to be more predictable than bespoke conventional projects, thereby reducing the risk of delays and projects overruns.
• Quicker – Modular units are built in one location and can be shipped by rail or road and assembled on site. This could help reduce commissioning times to around four years versus seven years for conventional nuclear, four years for thermal plants and two to three years for renewables projects.
• Cheaper – Modular units are smaller than conventional reactors, reducing the upfront capital expenditure. Making modular equipment should allow for cost reductions over time; for example, Rolls-Royce expects its first five SMRs to cost £2.2bn each, falling to £1.8bn for subsequent units.

SMRs remain pre-commercial, with only two such reactors operating: China’s HTR-PM (210MWe, 2023) and Russia’s KLT-40S (35Mwe, 2019). Although this technology remains nascent, it has attracted substantial interest from technology firms seeking to secure stable, uninterrupted power for data centre operations. Around 25 GW of planned SMR capacity has been announced globally to date (dominated by the US) to supply the data centre sector. The maturity and certainty of these contracts remain in question, with SMRs unlikely to reach commercial deployment until the early part of next decade. Further, the incubation of SMR technology has been fraught with delay and interruption. NuScale Power, a US SMR developer, has seen several of its projects fail to meet first power deadlines in recent years.

Routes to investment in nuclear

We see a number of ways to invest in the growth of nuclear.

• Traditional reactor operators: Utilities or independent power producers (IPPs) operating traditional (+1GW) nuclear reactors. We see this as a compelling opportunity, with existing, legacy facilities benefiting from higher power prices, and increasingly from data centre PPAs, while leveraging assets constructed before 1970. These opportunities are well represented in the Guinness Sustainable Energy portfolio, through names like NextEra (NEE US), the US’s sixth largest nuclear fleet operator, and Iberdrola (IBE SM) in Europe.
• Capital Goods: Equipment suppliers to newbuild and life-extension projects. These companies supply key equipment to nuclear facilities. We note that these are seldom pure-plays, and nuclear often comprises a minor part of these diversified capital goods enterprises.
• Life extension enablers: Companies providing construction or consultancy services to life extension. These businesses are niche and are typically units within larger enterprises. They provide expert design, engineering and labour. SPIE (SPIE FP), a portfolio holding, is a prominent example, and has been awarded the master electrical engineering contract on EDF’s “Grand Carenage” project, the life extension of c.27GW of capacity.
• SMR: Manufacturers and Operators of SMRs. This set of businesses is comprised of pure-plays and conglomerates. The pure-plays include one listed name, NuScale Power (SMR US) and a number of privates; TerraPower, X-Energy, Westinghouse and Kairos Power.
• Fuel Supply: Companies mining, milling, converting or enriching Uranium. In principle, the attraction of these businesses is their leverage to nuclear demand, with revenues a function of uranium price. Names in this segment include Cameco (CCJ US), Denison Mines (DNN US), NexGen Energy (NXE US) and Centrus Energy (LEU US).

Conclusion

Nuclear power deployment is set to increase following decades of stagnation, a consequence of the inexorable growth in demand for power, the need for stable zero-emission baseload, and shifting policy and public perceptions of the viability and safety of nuclear. The costs and timescales involved in new nuclear construction will remain an impediment to breakout growth, and we see the most significant opportunity within this space to be the life extension of existing facilities. Although we note new technologies like SMRs, we remain cautious on their economic viability, and recognize that they are yet to be commercially delivered in spite of the wave of interest that they have generated from data centre operators and technology firms.

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