Energy industry experts and finance executives are skeptical about new-build nuclear despite renewed interest in nuclear generation from utilities and large-load customers looking to build datacenters.
"There's clearly some momentum there," Vivek Kagzi, a managing director at Goldman Sachs Group Inc., said during a discussion at the S&P Global Power Markets Conference in Las Vegas on April 16. "Now, hit that with the reality of what has actually happened with nuclear over the last 20, 30 years."
Southern Co.'s Vogtle Nuclear Plant units 3 and 4, completed in 2023 and 2024, are the first new nuclear units in the US in decades, "and that was significantly way over budget, way behind schedule," Kagzi said. There are no new nuclear reactors under construction in the US, though some are in planning phases.
Such projects involve large capital outlays and longer timelines compared to other generation, Kagzi acknowledged. Whereas a gas plant might take six years to build, the timeline for nuclear reaches a decade or more.
"There aren't many companies that could take on that [kind of] risk and finance that, and the capital needs are just so tremendous," said Gregory Hort, a managing director at Lazard Inc. "Our view is that if this ultimately comes to fruition, it's going to have to [be] through some kind of government-supported initiative."
"That's the way it gets financed ... at least in the beginning phases where there's tons of risk," Hort added. "[Not] through the private markets."
Financing new build is 'a tough one'
Regulated utilities are considering new nuclear, but financing a new build is daunting, said Patrick Boultinghouse, a managing director at Bank of America Corp.
"Everyone's looking at it, everyone's talking about it," Boultinghouse said of interest in nuclear amid burgeoning load forecasts. "There's a lot of skepticism."
There is already enough to consider for new gas plants that many utilities are already planning.
"They're thinking about, 'How is this going to impact my balance sheet? How's it going to impact my credit metrics? What's going to be the drag as I'm building this place and capital is going out the door?' Imagine doing that with nuclear," Boultinghouse said.
"It's like a [combined-cycle gas turbine] plant on steroids from a financing perspective. ... And to get your regulator behind it, God bless ya. It's a tough one."
It is difficult to structure project finance deals on nuclear technology, said Allan Sun, head of project finance for the Industrial and Commercial Bank of China's New York branch.
"If you have a history of overrun delays, you need some sort of corporate guarantee of recourse, and that's not [project finance]," Sun said. "For nuclear, it's very hard to forecast as a future cash flow pattern. ... High maintenance, high fixed cost and also uncertain fixed costs. So I think it's not a suitable technology."
Nuclear has a history of long timelines and cost overruns in the US, but advanced technologies promise shorter construction timelines and lower costs while retaining reliability and offering carbon-free energy attractive to customers. But none are commercially available in the US.
Utilities that include advanced nuclear in resource planning primarily relegate it to the mid-2030s at the earliest. Some, like Duke Energy Corp., have identified potential sites.
"There's a lot of new technologies people are talking about," Kagzi said, specifically citing small modular reactors (SMRs). "But from my perspective, that's just really early scale on the technology side.
"Today, it's being funded by venture capital. I think that's probably still the right place for that."
Renewed interest
US tech companies have shown growing interest in nuclear, particularly in the past year, seeking gigawatts of firm, carbon-free power for AI operations and datacenter projects. Companies announced several deals in 2024 to partner with existing nuclear generation or advanced nuclear developers.
"You have a high degree of reliability from nuclear plants," said Bill Berg, vice president of wholesale market development at Constellation Energy Corp. "What we've seen from our customers is they like that. They like the clean [energy]."
Those same customers are also looking for increased reliability through grid connections, which existing nuclear plants can provide — even some that have been retired and might be restarted, such as Constellation's Three Mile Island unit 1.
The unit shut down in 2019 after struggling to compete with other generation, primarily natural gas, during a period of lower demand. In September 2024, Constellation announced that Microsoft Corp. will buy the unit's output under a 20-year purchase agreement to help power its datacenters in the PJM Interconnection LLC market.
"Three Mile Island is going to go from a cost liability to a revenue generator," said Fredric Rosenberg, a managing director at Deutsche Bank.
Whether partnerships like the one to revive Three Mile Island unit 1 represent a greater trend for the US nuclear fleet remains to be seen, however.
Utilities and other owners are seeking license renewals for existing units, but a large-scale resurgence of merchant nuclear appears unlikely, said Keith Adams, power, utilities and renewables sector leader at Deloitte.
"We need more nuclear assets in the US, but ... I do not believe there's a future for merchant nuclear, at least at the gigawatt scale," Adams said. "Perhaps SMRs, but only after we've had some experience and plug and play them in the market for a while.
"I don't think there are a lot of companies that can have a strong enough balance sheet to withstand the risk, the schedule risk, the cost risk and other risks associated with that new nuke without them being either in rate base or having a full-requirements PPA. We need risk-sharing agreements for things to happen."
The technology companies could step in to take on some of that financial risk, Adams said, "but I don't think they would do it on a merchant basis."
Managing risk
If new nuclear moves forward in the US in any form, developers will need to manage substantial risk associated with the projects and the industry's history, experts said.
"We're not anxious to be atomic license number one on an SMR because we want to be the seventh or eighth to try it out," said Tom Jones, senior director of regulatory, environmental and repurposing at PG&E Corp. subsidiary Pacific Gas and Electric Co.
PG&E is one of the largest utilities in the US by retail customer count, but its market cap is about $35 billion, Jones said. The Vogtle expansion totaled more than $30 billion.
Utilities could step in as plant operators if others finance the investment to construct new nuclear generation, Jones said.
"But it's probably not our highest priority to take that kind of [project] on," Jones said.
Risk management for nuclear could come in the form of government support, particularly at the federal level with regulatory reform, tax credits and other incentives or even cost-overrun insurance, said Benton Arnett, senior director of markets and policy at the Nuclear Energy Institute, an advocacy group.
"Taking on a lot of debt to build a reactor project that might take you eight years, that's unappealing to a lot of utility structures and so we do see opportunities for private capital to start coming and playing a role in some of these builds," Arnett said. "We're also seeing efforts at the federal policy level to try and shore up cost-overrun risks and expand the role that federal loan guarantees can play in providing some of that upfront capital."
Whether existing incentives will remain in place, such as tax credits passed under the Inflation Reduction Act that benefit existing and new nuclear, is uncertain, Arnett said.
"Signals have all been consistent to support nuclear" under the Trump administration, Jones said. "[But] it's just a little bit of volatility that's making people concerned. The actions have been real, but the volatility is frightening."
