Nuclear energy

Nuclear energy’s resurgence has continued at pace over the past year. Around the world, policymakers, developers and investors are showing renewed interest in conventional nuclear power, whilst the race to commercialise small modular reactors (“SMRs”) and fusion is raging on. This is creating new opportunities for sponsors, investors, and large energy users. In this article, we explore the broad state of the market, together with implications for sponsors, investors and corporates.

Global market dynamics and policy shifts

Over the last 12 months, we have seen continuing rapid development of the nuclear sector in China, a major policy shift in Japan calling for “maximising the use of nuclear energy”, consistent support for existing nuclear technologies in Europe and the US and high levels of investment in new nuclear technologies. As noted in the IEA’s World Energy Outlook 2025, “as demand surges and the need for reliable, low-emissions baseload electricity increases, nuclear is increasingly seen as a critical part of a secure, affordable and diverse electricity mix”.

That said, nuclear policy remains acutely vulnerable to electoral volatility. The temporal mismatch is fundamental: nuclear projects unfold across decades, yet political mandates typically operate within four-to-five-year horizons. Consequently, administrative transitions can fundamentally reshape permitting schedules, recalibrate support mechanisms and – perhaps most crucially – erode or reconstitute the fragile social licence upon which both new-build programmes and life extension initiatives ultimately depend. This structural tension between project longevity and political change constitutes an enduring source of regulatory and investment uncertainty.

Total investment in the nuclear value chain is forecast to reach $2.2 trillion over the next 25 years with global nuclear capacity set to more than double in the same period – from 398 GW in 2025 to 860 GW in 2050. Whilst much of this growth is driven by China (which currently has more nuclear plants under development than any other country), other countries are also showing renewed ambitions.

In May 2025, President Donald Trump issued a series of executive orders aimed at quadrupling the United States’ nuclear generating capacity by 2050. France needs to renew its significant fleet of nuclear reactors, running both a life extension programme whilst preparing for its EPR 2.0 new-build programme. The Belgian government struck an agreement with Engie in March 2025 to extend the life of its Tihange 3 and Doel 4 reactors by ten years. As noted above, Japan has dropped prior policy commitments to reduce reliance on nuclear energy and pivoted once more to maximising its use, while South Korea is re-emphasising nuclear as part of its export and industrial strategy. Across central and eastern Europe (including Poland, the Czech Republic and Romania), as well as in the Gulf (notably the UAE and Saudi Arabia), governments and utilities are actively exploring large-scale plants and SMR deployments, creating a broader pipeline of opportunities for sponsors and investors.

UK: new build, life extensions, and financing models

In the UK, the government’s stated ambition is still to deploy up to 24 GW of nuclear capacity by 2050, with Great British Nuclear established to help deliver this programme. Whether this is achievable given planning and construction timescales remains to be seen, and progress will be needed in harmonising regulatory requirements and reducing red tape.

Prime Minister Keir Starmer has recently issued a “strategic steer” to the nuclear sector in which he stressed the need for regulation to be proportionate, with regulators as “active enablers of progress”, in order to prevent delays in nuclear projects. In particular, Starmer emphasised both the importance of regulators, planning bodies, and government departments acting “as one team”, but also the need for UK regulators to “work closely with trusted overseas regulators” (particularly in the context of SMRs) to ensure appropriate regulatory alignment. The ‘strategic steer’ also pointed to the Planning and Infrastructure Bill, which contains a number of planning measures designed to reduce obstacles to the development of future nuclear projects.

For now, all but one of the nuclear power stations currently in operation are due to close by the early 2030s, with two large-scale new power stations in development at Hinkley Point C and Sizewell C. It is likely that there will be a sizeable decrease in the UK’s nuclear power generating capacity prior to these two new projects coming online over the next two decades. There is however, consistent support in the UK for nuclear energy from both the public and private sectors. The most notable example of this trend is the recent financial close of the 3.2 GW Sizewell C nuclear power station – a joint investment between the UK government, EDF, Centrica, La Caisse and Amber Infrastructure.

The Sizewell C project is especially noteworthy for being the first project to be funded using the UK’s nuclear regulated asset base (“RAB”) model. The adoption of a RAB model marks a fundamental shift in how construction and financing risks are allocated in UK nuclear new build projects. Under the model, eligible project costs can be recovered from electricity consumers during construction, subject to regulatory oversight. This means that developers and investors earn a return on their capital throughout the construction period, lowering the overall cost of capital and broadening the pool of potential investors. For institutional capital, the focus is on the stability of the regulatory regime, indexation and incentive mechanisms, and how construction phase overruns, performance shortfalls and decommissioning obligations will be treated within the allowed revenue.

SMRs, AMRs and fusion: from prototypes to pipelines

Whilst established nuclear technologies have captured the headlines in recent months, investment in and development of small modular reactors has continued apace with a range of projects announced in 2025 across the UK, United States, Canada and China.

In November 2025, the UK government announced that Wylfa in Anglesey will host the UK’s first SMRs and that Rolls-Royce SMR - successful in the Great British Nuclear SMR competition – will be its preferred technology provider. This aligns with a further government announcement that North Wales - which includes the proposed Wylfa SMR - will host the first UK AI Growth Zone.

Other notable developments include the announcement by Centrica and X-energy of a joint development agreement aimed at deploying 6 GW of new nuclear capacity in the UK using X-energy’s Xe-100 SMRs. Alongside this, UK-Czech cooperation on SMRs has accelerated at both the commercial and governmental levels: in 2024, Rolls-Royce SMR and ČEZ Group announced a strategic partnership, including an approximately 20% equity investment by ČEZ, to support deployment of Rolls-Royce SMR technology in the Czech Republic, and to advance plans for up to 3 GW of capacity. This sits naturally alongside the UK-Czech civil nuclear memorandum of understanding, signed in July 2025, which signals closer collaboration across policy, industry cooperation and supply chain opportunities.

In the EU, the European Commission launched a call for evidence in November 2025 to help shape its upcoming SMR strategy which is aimed at accelerating the development and deployment of SMRs in Europe over the next decade. Advanced modular reactors (“AMRs”) - such as high-temperature, gas-cooled reactors – will follow similar, but not identical regulatory and commercial trajectories, potentially with stronger emphases on use cases including industrial heat, maritime and mining.

Whilst commercially deployable nuclear fusion technology remains a long-dated proposition, private sector investment in the area remains strong. In August 2025 Commonwealth Fusion Systems raised $863m, whilst, in January 2025, Helion Energy announced a $425m fundraise with investors including SoftBank. Industry players remain bullish about the potential of the technology with the International Atomic Energy Agency recently declaring that, with more than 160 fusion devices either operational, under construction or planned, “fusion energy is entering a new phase of real-world implantation”.

Governments and regulators are also beginning to consider how existing nuclear safety, licensing and waste management frameworks should apply to fusion facilities. Yet, there is no settled consensus on whether fusion should be regulated identically, or subject to a more streamlined regime.

What this means for sponsors, investors and corporates

Whilst the long-term role of nuclear in the UK’s energy mix appears secure, the next decade will be characterised by fluctuations in nuclear capacity with the closure of the majority of existing plants by the early 2030s before Hinkley Point C and Sizewell C respectively start commercial operations. At a macro level, the closure of nuclear plants may lead to an increase in electricity prices but will reduce the amount of low-carbon baseload capacity available on the grid and will pull biomass and gas-fuelled power stations (in each case, whether CCS-enabled or not) up the merit order.

The rise of AI presents a range of opportunities for developers and investors in the nuclear sector. For example, nuclear energy is increasingly attractive for large-scale data centres because it combines high-capacity, predictable output with a very low carbon lifecycle footprint. Given existing trends in constrained grid connection capacity, volatile wholesale prices and mounting scrutiny of AI’s energy and emissions impacts, long-term access to dedicated or preferential nuclear supply can become a strategic differentiator. In addition, the relationship is essentially symbiotic, as AI can support nuclear innovation, particularly in the context of SMRs and nuclear fusion. These dynamics may accelerate investment and innovation across the nuclear value chain, particularly for SMRs and associated supply chains. Yet, for all the technological synergies and commercial momentum, the sector’s trajectory remains hostage to a variable that even sophisticated contracts cannot hedge: nuclear policy exhibits an acute vulnerability to changes of government, exposing even the most carefully structured transactions to macro-level political discontinuity.