Can Private Capital Fuel the Next Era of Nuclear Power?

Navigating the Complexities of Private Financing for New Nuclear Projects Amid Shifting Investor Sentiments

Editorial Team (ET)June 30, 2025

Private financing for nuclear energy projects has seen a rise in interest as nations focus on reducing carbon emissions and securing energy independence. However, despite this increased willingness to invest, significant barriers remain, particularly concerning the lengthy timelines of nuclear projects and the perceived regulatory risks. This issue was at the center of discussions at the World Nuclear Symposium, where industry experts delved into the complexities of funding new nuclear power projects.

Growing Interest in Nuclear Investment

In the past, nuclear energy was largely dismissed by investors, especially those with a focus on Environmental, Social, and Governance (ESG) principles. Vicki Kalb, Global Head of ESG and Sustainability Research at UBS, explained that until recently, discussing nuclear investment with investors was nearly impossible. However, she noted that the landscape shifted dramatically in 2022 due to two major factors: geopolitical instability and the European Union’s inclusion of nuclear in its green taxonomy.

Kalb emphasized that nuclear's inclusion in the EU's sustainable investment criteria marked a turning point for investors, particularly as concerns about energy security intensified following Russia's invasion of Ukraine. The surge in electricity demand from sectors like data centers and artificial intelligence also played a role in focusing investor attention on the importance of reliable, large-scale energy production, such as that provided by nuclear power.

The Role of Nuclear in the Energy Transition

Nuclear energy is now being recognized for its crucial role in helping nations meet their net-zero targets. While renewable energy sources like solar and wind have made significant contributions to decarbonization, they face limitations, particularly in terms of reliability and scalability. Nuclear energy, by contrast, provides a stable, continuous source of electricity, which is essential for meeting the growing global demand for clean power. Nuclear’s inclusion in the EU's green taxonomy not only legitimized it as a sustainable investment but also made it more attractive to ESG investors, who had previously avoided nuclear due to concerns about safety, waste, and environmental impact. The recognition of nuclear’s role in the energy transition has sparked renewed interest in funding new nuclear projects.

Challenges in Private Nuclear Financing

Despite growing interest, several challenges still hinder the flow of private capital into nuclear projects. Chief among these are the lengthy timelines associated with nuclear construction and the regulatory risks that come with such long-term investments.

Long Investment Timelines

Nuclear power plants take years, often decades, to construct and bring online. This poses a significant challenge for institutional investors, who typically seek quicker returns on their investments. Vicki Kalb highlighted this issue, noting that many investors are concerned about the long timeframes required to see returns on nuclear projects. With construction and operational lifetimes spanning 40 years or more, nuclear investments fall outside the typical investment window of most private equity funds.

Regulatory Risks

Nuclear energy is also heavily regulated, with concerns about safety, waste management, and environmental impact complicating the investment process. Seb Henbest, Group Head of Climate Transition at HSBC, pointed out that while banks are increasingly supportive of energy transitions, they remain wary of nuclear due to its complex regulatory landscape. The long-term commitments required for nuclear projects add to the uncertainty, making it difficult to secure the necessary financing.

Henbest further explained that while nuclear’s role in meeting net-zero goals has reduced some of the reputational risks associated with these projects, the regulatory risks remain a significant barrier. Investors are particularly concerned about the potential for regulatory changes over the multi-decade lifespan of a nuclear power plant, which could affect the profitability and viability of the investment.

The Influence of ESG on Nuclear Investment

ESG criteria have played an increasingly important role in investment decisions across industries, and nuclear energy is no exception. Until recently, nuclear was largely excluded from ESG portfolios due to concerns about its environmental impact. However, this has begun to change as the conversation around energy security and decarbonization has evolved.

Vicki Kalb noted that the events of 2022, particularly the war in Ukraine, significantly shifted investor perspectives. As energy security became a top priority for nations around the world, the need for reliable, low-carbon energy sources like nuclear became more apparent. Additionally, the rapid growth in electricity demand from sectors such as artificial intelligence and data centers has further emphasized the importance of nuclear power in meeting future energy needs.

Institutional Investor Hesitancy

While there is growing interest in nuclear projects, institutional investors still face considerable hesitancy when it comes to committing capital. Seb Henbest highlighted the importance of strong offtake partners and solid credit ratings for nuclear projects, similar to other large-scale energy infrastructure. Without the assurance of long-term revenue streams, many investors remain cautious about entering the nuclear market.

Additionally, the long timelines associated with nuclear investments make it challenging for traditional investors to get involved. Pension and insurance funds, which operate on longer investment horizons, are often better suited to nuclear projects than private equity firms, which typically seek quicker returns.

Learning from Renewable Energy Financing

Renewable energy projects, particularly solar and wind, have seen significant success in attracting private capital due to their scalability and shorter return windows. In contrast, nuclear power has struggled to compete in terms of cost and speed. However, there are lessons to be learned from the renewable sector that could help improve nuclear’s financing prospects.

One potential game-changer is the development of Small Modular Reactors (SMRs), which promise to reduce the capital costs and construction times associated with traditional nuclear power plants. SMRs can be built in factories and assembled on-site, offering the potential for series production and lower costs through economies of scale. This modular approach to nuclear construction could make it more attractive to private investors by reducing the risks associated with long timelines and cost overruns.

Public-Private Partnerships and Government Support

Public-private partnerships are seen as a critical component in the future of nuclear financing. Governments can play a crucial role in mitigating some of the risks associated with nuclear projects by providing financial support, particularly for first-of-a-kind technologies like SMRs. Ed Cook, Global Head of Capital Markets at BlackRock, noted that government support, such as pre-development finance, can help bridge the gap between private capital and nuclear projects.

Furthermore, many experts believe that nuclear energy’s inclusion in green taxonomies is only the first step. To truly unlock private capital, further government incentives, such as subsidies or tax credits, may be necessary to make nuclear projects competitive with renewable energy investments.

Conclusion: A Path Forward for Nuclear Financing

The future of nuclear financing will require a collaborative effort between the public and private sectors. While there are significant challenges, including lengthy timelines and regulatory risks, the growing recognition of nuclear’s role in the energy transition offers hope for increased investment. By leveraging new technologies like SMRs and forming strong public-private partnerships, nuclear power could become a more attractive option for private investors, helping to accelerate the deployment of this critical energy source.

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