Your browser does not support JavaScript!

Nuclear Power’s Next Chapter: Global Capacity, SMR Expansion, and U.S. Policy Empowerment

General Report April 28, 2025
goover

  • As of April 28, 2025, the nuclear energy sector is undergoing a significant transformation marked by projected global capacity growth and the rising prominence of small modular reactors (SMRs). Industry forecasts anticipate that global nuclear capacity will increase from 395 gigawatts (GW) in 2024 to approximately 494 GW by 2035, reflecting a compound annual growth rate (CAGR) of around 2%. This growth reinforces the sector's resilience amidst evolving energy demands and the urgent need for low-carbon energy sources. Additionally, nuclear electricity generation is set to rise from 2, 616 terawatt-hours (TWh) to 3, 410 TWh by 2035 as countries increasingly lean into nuclear energy as a mainstay in their decarbonization strategies.

  • The advancement of SMRs, in particular, is noteworthy. They promise to simplify deployment through factory fabrication, thereby reducing construction costs and time. The projected market for SMRs is set to grow significantly, with estimates indicating a rise from approximately USD 6.09 billion in 2025 to around USD 14.84 billion by 2032, fueled by the growing global demand for clean energy solutions. Furthermore, the United States has seen renewed interest in nuclear power spurred by the Inflation Reduction Act, which introduced technology-neutral tax credits that enhance the competitiveness of nuclear projects against other energy sources. The dual role of SMRs in addressing both energy security and climate objectives is pivotal as the world transitions to more sustainable energy sources.

  • Another critical aspect of the current nuclear landscape is the emerging application of nuclear energy in supporting data centers. With electricity demands projected to increase dramatically due to advancements in artificial intelligence (AI) and data processing needs, nuclear power is positioned to provide the reliable baseload energy necessary for this rapidly expanding sector. Collectively, these insights highlight the potential trajectory of nuclear energy as a cornerstone in the clean-energy transition, emphasizing the necessity for continued investment, regulatory support, and innovation in reactor technology.

Overview of the Nuclear Energy Industry

  • Historical evolution of nuclear power

  • Nuclear energy development commenced in the mid-20th century, emerging from atomic research related to World War II. The first commercial nuclear power reactors began operations in the 1950s, initiating a phase of rapid growth in nuclear electricity generation throughout the 1960s and 1970s. Early expansion was primarily driven by optimism surrounding nuclear energy as a high-density energy source and, in various nations, by the oil shocks of the 1970s that catalyzed a desire for energy independence. However, by the late 1970s, public confidence was shaken by incidents and safety concerns. The 1979 Three Mile Island incident in the USA, which was a partial meltdown of a reactor core without significant offsite radiation release, resulted in a decrease in new reactor orders in the United States and instigated stricter regulatory oversight.

  • The more severe Chernobyl disaster of 1986, in the USSR, released significant radiation and highlighted the necessity for robust reactor designs and international cooperation on safety. Consequently, global nuclear safety standards were reinforced, with the International Atomic Energy Agency (IAEA) convening new conventions to promote safety protocols among countries. Throughout six decades, despite two major accidents, nuclear energy has demonstrated a safety record comparable to, if not better than, other major energy industries.

  • The late 20th century witnessed uneven growth: countries like France and Japan pursued ambitious nuclear programs, whereas the U.S. largely ceased new plant construction post-1980s. In the 1990s, apprehensions surrounding nuclear waste and weapons proliferation dampened public support in certain regions, leading nations like Italy and Germany to establish policies aimed at phasing out or avoiding nuclear energy altogether. However, the early 2000s heralded discussions of a 'nuclear renaissance' driven by climate change awareness. Numerous new reactors were constructed in Asia, particularly in China, South Korea, and India, while Western countries maintained a stagnant build rate.

  • The 2011 Fukushima Daiichi incident (arising from a significant earthquake and tsunami in Japan) further influenced nuclear policies globally. For instance, Germany expedited its nuclear phase-out, concluding with the closure of its last reactors by 2023, and Japan shut down its fleet for stringent reviews and safety evaluations. Nevertheless, many nations proceeded with their nuclear ambitions: China’s nuclear expansion continued largely unimpeded, and Russia persisted in exporting nuclear technologies.

  • As we entered the 2020s, a broader reassessment of nuclear energy emerged, spurred by climate imperatives and energy security concerns. An increasing number of countries have incorporated nuclear energy into their decarbonization strategies targeting 2030–2050, with some historically anti-nuclear nations reversing earlier stances. Between 2022 and 2025, countries like Italy, Spain, Belgium, and South Korea reassessed their nuclear policies, demonstrating rising support for nuclear energy, particularly in South Korea, which opted to restore plans for reactor construction.

  • Current global generation landscape

  • As of April 2025, the global landscape for nuclear power generation is characterized by around 440 operational power reactors across 31 countries, collectively generating approximately 390 gigawatts of electrical power (GWe). In 2023, nuclear power accounted for about 9% of global electricity production, making it the second largest source of low-carbon electricity after hydropower. Notably, nuclear plants are renowned for delivering reliable baseload power, often achieving high capacity factors, which signify the percentage of time a generated power plant is producing at its maximum output. This reliability positions nuclear energy as a significant component in the energy mix, particularly in efforts to combat climate change.

  • The recent years have seen a revitalization of interest in nuclear energy due to its low-carbon profile, with 2023 witnessing global nuclear generation reach 2, 602 terawatt hours (TWh). Additionally, there were 64 reactors under construction in 15 countries, evidencing the industry's momentum. A coalition of 25 countries even articulated a goal in late 2023 to triple global nuclear capacity by 2050 to meet broader climate objectives. This renewed emphasis on nuclear energy is crucial as countries aim to transition towards sustainable energy systems and mitigate carbon emissions.

  • Key industry supply-chain dynamics

  • The nuclear energy industry comprises a complex value chain that extends from raw material extraction to the management of waste and decommissioning of plants. This value chain encompasses several specialized activities: uranium mining and milling, fuel processing and enrichment, fabrication of nuclear fuel, electricity generation in reactors, spent fuel management, and the eventual decommissioning of nuclear facilities.

  • Uranium holds a pivotal position in nuclear energy production; it begins with mining, primarily sourced from Kazakhstan, Canada, and Australia. As of 2023, Kazakhstan alone represented a substantial 43% of global uranium mine output, with advancements in in-situ leaching technologies minimizing environmental impact and costs. Following extraction, uranium is enriched and fabricated into nuclear fuel, essential for reactor operation. The engagement of global suppliers in this supply chain is crucial, particularly in light of geopolitical considerations. For instance, the international landscape is evolving as actions taken in the U.S. and Europe to reduce reliance on Russian-enriched uranium have spurred domestic investments.

  • In summary, the nuclear energy supply chain is critical to fueling the global nuclear reactor fleet effectively, with some regions actively seeking to bolster their capabilities and ensure secure, sustainable supply lines as they strive for energy independence in a carbon-constrained future.

Global Nuclear Capacity Forecast

  • Projected growth to 2035

  • A recent report by GlobalData has projected that global nuclear capacity is set to increase from 395 gigawatts (GW) in 2024 to approximately 494 GW by 2035. This significant growth trajectory reflects a Compound Annual Growth Rate (CAGR) of around 2%, underscoring the nuclear sector's resilience and adaptability in the face of evolving energy demands. By 2035, nuclear electricity generation is anticipated to rise from 2, 616 terawatt-hours (TWh) to 3, 410 TWh as countries around the world pursue greater reliance on low-carbon energy sources in their transition towards decarbonization.

  • The driving forces behind this projected growth include a heightened emphasis on energy security, especially fueled by recent geopolitical tensions, coupled with a global demand for reliable low-carbon baseload power. Many regions are recognizing the need to reduce their dependency on fossil fuels while accommodating the increasing electricity demands posed by various sectors, especially with the rise in energy consumption from data centers.

  • Drivers of capacity expansion

  • Several key factors are contributing to the expected expansion of nuclear capacity on a global scale. Primarily, technological innovation plays a crucial role, particularly with the emergence of small modular reactors (SMRs). These advanced reactor systems are engineered to be factory-fabricated, which facilitates quick assembly and reduces associated costs and construction times. SMRs, with capacities typically under 300 MW, are gaining traction due to their flexibility and enhanced safety features, making them suitable for both urban and remote applications.

  • Supportive governmental policies, including investment tax credits (ITCs) and production tax credits (PTCs), also serve as significant incentives for the nuclear sector. As governments around the world commit to ambitious net-zero targets, they are increasingly incorporating nuclear energy into their clean energy plans. Additionally, market mechanisms such as Contracts for Difference (CfDs) provide further financial security, enabling investors and operators to mitigate potential risks associated with nuclear energy projects.

  • Regional variations in deployment

  • The pace and strategy of nuclear capacity expansion exhibit notable regional differences. For instance, the United States continues to be the largest producer of nuclear power, with a capacity of 97 GW generating 787.6 TWh as of 2024. However, while the U.S. focuses on maintaining and extending the life of its existing reactors, countries like China are aggressively expanding their nuclear fleets to meet increasing energy demands, leveraging their younger and faster-growing reactor technologies.

  • In addition to the U.S. and China, other notable players in the nuclear arena include France, which derives over 60% of its electricity from nuclear power, and is pursuing lifetime extensions for its current fleet to boost generation. Similarly, nations such as Canada and the UK are exploring diverse deployment strategies, particularly with SMRs, balancing energy needs with efforts toward reducing carbon emissions. Overall, these regional differences underscore the global nature of the nuclear energy discourse and its integral role in various national energy policies.

Small Modular Reactors: Market Trends and Innovations

  • SMR market size and forecast (2025–2032)

  • The market for small modular reactors (SMRs) is projected to experience significant growth, with estimates indicating a rise from approximately USD 6.09 billion in 2025 to around USD 14.84 billion by 2032, reflecting a compound annual growth rate (CAGR) of roughly 8.9% during this period. This growth is largely driven by the escalating demand for clean and sustainable energy sources as nations strive to meet their decarbonization goals. SMRs, known for their compact size and modular design, facilitate economic and flexible deployment, particularly in capacities that can be met without extensive infrastructure, making them appealing in locations where large nuclear facilities are impractical. The continuing emphasis on reducing dependence on fossil fuels is set to further catalyze the expansion of the SMR market.

  • Technological advancements and cost competitiveness

  • Technological advancements in small modular reactor designs are pivotal in enhancing their cost competitiveness and safety features. SMRs, capable of generating less than 300 megawatts (MW) of electricity, are designed for efficient, factory-based production, which can significantly decrease construction costs and lead times compared to traditional large-scale reactors. Innovations such as Integrated Plant Design and enhanced safety mechanisms, including passive safety systems that function without external power, contribute to their appeal. Additionally, modern reactor types, such as Molten Salt Reactors and High-Temperature Gas-Cooled Reactors, promise not only increased efficiency but also improved operational flexibility and lower fuel costs, which are essential for achieving price parity with rival energy sources, including renewables and fossil fuels.

  • Case study: NuScale Power’s market potential

  • NuScale Power stands out as a frontrunner in the SMR sector, having developed the first SMR design to receive standard design approval from the U.S. Nuclear Regulatory Commission (NRC). This approval marks a critical advance in the path toward commercial deployment. NuScale's modular design allows for the assembly of up to twelve power modules at a single site, potentially generating 924 MW of electricity. The company is strategically positioning its technology to replace aging coal plants in several markets, emphasizing economic benefits due to lower upfront investment and construction costs. Internationally, NuScale is involved in a project in Romania, which aims to utilize a former coal plant site for its first power station, potentially generating significant energy outputs as early as 2029. This combination of innovative design and strategic partnerships highlights NuScale's role in shaping the future of nuclear energy and underscores the broader market potential for SMRs in the global quest for reliable and sustainable energy solutions.

U.S. Nuclear Policy and Incentives

  • Impact of the Inflation Reduction Act’s tax credits

  • The Inflation Reduction Act (IRA), enacted in 2022, introduced technology-neutral tax credits that have become pivotal for the revival of nuclear energy in the U.S. The act includes both a Production Tax Credit (PTC) and an Investment Tax Credit (ITC), which significantly reduce the levelized cost of energy (LCOE) for nuclear projects and enhance their competitiveness against other sources of electricity generation. As nuclear power generates approximately 20% of U.S. electricity, its role in the energy mix is substantial, especially considering its high capacity factor of over 92% which offers grid reliability and stability.

  • The tax credits can materially lower capital costs associated with nuclear construction, which has historically encountered hurdles due to long lead times and high initial investments. Specifically, first-of-a-kind (FOAK) nuclear projects, with costs ranging from $3.7 billion to $7.7 billion per GW, can greatly benefit from these fiscal incentives. Estimates suggest that if the U.S. manages to initiate about 7.5 GW of nuclear capacity under construction by the end of 2030, up to 20% of ITC outlays could potentially support nuclear energy, underscoring its crucial role moving forward.

  • Moreover, the flexibility of the IRA's tax credits, allowing various carbon-free technologies to qualify, positions nuclear energy favorably alongside rapidly deployable renewables such as solar and wind. This is particularly critical in light of growing demands for electricity, driven notably by the rise of data centers and increased electrification across sectors.

  • Federal funding shifts post-2024 administration change

  • As the political landscape evolves, particularly following the 2024 administration change, expectations around federal funding for nuclear energy could see notable shifts. The IRA's technology-neutral framework has bipartisan support, but future commitments are contingent on the broader policy agenda of the incoming administration. The overarching goal remains: to facilitate infrastructure development that can accommodate expanding electricity demands, thus necessitating a sustained investment in nuclear alongside renewables.

  • Should the new administration prioritize climate initiatives, there may be further enhancements to funding for nuclear technology, thus bolstering its role in meeting ambitious climate goals. Critical evaluations of the success of the IRA thus far, alongside the determination of new funding mechanisms, will fundamentally influence the trajectory of nuclear energy investments moving into the latter half of this decade.

  • The recognition of nuclear’s potential, not just as a baseload power source but also as part of a diversified energy strategy that includes renewables, positions it uniquely for securing federal support and investment. Ensuring that the narrative around nuclear power includes its environmental benefits and capacity for innovation will be essential for attracting and maintaining political support in the years following this administration change.

Nuclear Energy in Emerging Applications

  • Data center power demand and growth trends

  • The escalating demand for electricity from data centers, particularly in the context of developments in artificial intelligence (AI), presents significant challenges and opportunities for energy sectors. Deloitte's analysis suggests that the electricity demand from U.S. data centers could surge five-fold by 2035, projecting a need of approximately 176 GW of power. This unprecedented growth highlights the urgency for sustainable energy solutions that can reliably meet such demand. Nuclear energy is poised to be a critical player in addressing this challenge, providing a stable and scalable power source capable of supporting the anticipated expansion of data centers into more complex computational frameworks, including AI and machine learning applications.

  • Advantages of nuclear solutions for high-reliability loads

  • Nuclear energy offers several compelling advantages that make it particularly suited for meeting the rigorous and high-reliability energy demands of data centers. One of the most notable benefits is the provision of reliable baseload power — nuclear plants can operate continuously throughout the year, unaffected by weather conditions, thus ensuring uninterrupted operations critical for data centers that thrive on consistent power supply to maximize return on investments. Moreover, nuclear power boasts an impressive capacity factor exceeding 92.5%, significantly higher than other energy sources, such as natural gas and various renewables. This high efficiency is increasingly vital as data centers scale up in size and complexity. Furthermore, the energy density of nuclear fuel means that a relatively small amount can generate substantial electricity output, reducing both fuel storage requirements and transportation needs, which contributes to both operational cost-effectiveness and lower environmental impact. Specifically, a single nuclear reactor, typically generating over 800 MW, is more than capable of catering to even the largest data centers, whose power demands can range between 50 MW to 100 MW. This capability suggests that nuclear solutions could meet considerable portions of the growing energy needs, with projections estimating that new nuclear capacities could fulfill around 10% of the increase in data center demand anticipated over the next decade. The low-carbon emissions profile during operation further establishes nuclear energy as a clean alternative, as it produces virtually no greenhouse gases, thereby aligning with global decarbonization objectives and the clean-energy transition that many sectors are pursuing. In summary, the combination of reliability, efficiency, and low environmental impact underscores nuclear energy's potential suitability to power the rapidly growing data center industry, establishing it as a key player in future energy strategies.

Wrap Up

  • In summary, nuclear power has reached an inflection point characterized by robust global capacity forecasts and the strategic rollout of small modular reactors, which offer flexible, cost-effective deployment options essential for achieving decarbonization goals. The crucial role of the Inflation Reduction Act in the U.S. has not only stimulated investment in nuclear energy but has also highlighted the technology's adaptability in addressing contemporary energy challenges, particularly the rising power demands associated with data centers.

  • Looking ahead, it is imperative for stakeholders to focus on enhancing frameworks for SMR licensing to ensure timely project implementation. Moreover, aligning supply chains with anticipated demand and nurturing public-private partnerships can amplify the efficacy of policy incentives. As innovations continue to unfold, the interplay between advanced reactor technology and supportive governance will be fundamental in unlocking nuclear energy's potential, enabling it to fulfill a significant role in the global transition towards sustainable energy. Enhanced collaboration among governments, industry leaders, and communities will be essential to realizing this vision, ensuring that nuclear energy not only contributes to energy security but also aligns with broader environmental objectives.

Glossary

  • Nuclear Energy: Nuclear energy is produced through nuclear reactions, primarily fission, where the nucleus of an atom splits into smaller parts, releasing a significant amount of energy. As of April 2025, it is a major source of low-carbon electricity, providing around 9% of global electricity production.
  • Small Modular Reactors (SMRs): SMRs are advanced nuclear reactors designed to be manufactured at a plant and transported to sites for installation. They are characterized by their smaller size (typically under 300 MW) and are seen as a more flexible and safer alternative to traditional large reactors. They are expected to grow from approximately USD 6.09 billion in 2025 to around USD 14.84 billion by 2032.
  • Inflation Reduction Act (IRA): The Inflation Reduction Act, enacted in 2022, introduced technology-neutral tax credits providing incentives for clean energy projects, including nuclear power. Its measures aim to reduce the levelized cost of energy (LCOE) significantly for nuclear projects, enhancing their competitiveness and facilitating investment.
  • Global Capacity: Global nuclear capacity refers to the total amount of electrical power (measured in gigawatts, GW) that operational nuclear reactors around the world can generate. As of April 2025, this capacity is projected to increase to approximately 494 GW by 2035.
  • Decarbonization: Decarbonization is the process of reducing carbon dioxide emissions, particularly in power generation, to mitigate climate change. The nuclear sector is a key player in decarbonization efforts due to its low greenhouse gas emissions profile during electricity generation.
  • Capacity Factor: Capacity factor is a measure of how often a power plant is running at maximum output over a certain period. Nuclear power plants typically have high capacity factors (over 92%), indicating their reliability and ability to produce a steady supply of electricity.
  • Terawatt Hours (TWh): A terawatt hour (TWh) is a unit of energy equivalent to one trillion watt hours. It is commonly used to measure the annual electricity consumption of communities, countries, or global statistics. By 2035, nuclear electricity generation is expected to rise to 3, 410 TWh.
  • NuScale Power: NuScale Power is recognized as a leading company in the development of small modular reactors, having received the first standard design approval from the U.S. Nuclear Regulatory Commission (NRC). It aims to provide innovative solutions for replacing aging coal plants and enhancing clean energy production.
  • Data Centers: Data centers are facilities used to house computer systems and associated components, such as telecommunications and storage systems. The demand for electricity from data centers is projected to surge, increasing the need for reliable and sustainable energy sources like nuclear power.
  • Investment Tax Credit (ITC): The Investment Tax Credit is a financial incentive that allows investors to deduct a significant percentage of investment costs in renewable energy projects from their federal taxes. This plays a crucial role in promoting nuclear energy alongside other clean technologies.
  • Production Tax Credit (PTC): The Production Tax Credit provides a per-kilowatt-hour tax incentive for electricity generated from qualified energy resources. This credit is a critical support mechanism aimed at making nuclear energy more economically viable in the energy market.
  • Reactor Technology: Reactor technology refers to the engineering and design of systems that facilitate nuclear reactions for energy generation. Innovations in reactor technology, such as SMRs and advanced safety features, are crucial for improving the efficacy and appeal of nuclear power. As of April 2025, ongoing advancements are critical to addressing safety and efficiency concerns.

Source Documents