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Emerging Trends and Outlook in Nuclear Energy: SMRs, Policy Support, and Market Dynamics

General Report May 1, 2025
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  • As of May 1, 2025, the landscape of nuclear energy is evolving rapidly, with significant implications for global energy production and sustainability. The current global nuclear capacity stands at 395 gigawatts (GW), maintaining a crucial role as a low-carbon energy source amid increasing demands for reliable electricity. Projections indicate a robust growth trajectory, with expectations to reach 494 GW by 2035, representing a compound annual growth rate (CAGR) of approximately 2%. This growth highlights the strategic importance of nuclear energy in achieving energy security and environmental goals, especially in light of the energy diversification initiatives observed in several G20 nations, where nuclear energy is increasingly integrated into national energy strategies. Countries such as France, Slovakia, and Ukraine exemplify extensive reliance on nuclear power, which not only serves to meet electricity needs but also aids in reducing carbon emissions as part of broader climate objectives. The anticipated rise in nuclear capacity foreshadows an essential foundation for energy transition, enhancing the ability of nations to meet carbon neutrality targets and bolster energy independence.

  • Small Modular Reactors (SMRs) are poised to play a significant role as well, with the market expected to grow from USD 6.09 billion in 2025 to approximately USD 7.70 billion by 2032, translating into a CAGR of 7.1%. Their modular design, which facilitates factory assembly and easier transportation, positions SMRs as a flexible solution to meet diverse energy needs, particularly in remote or off-grid applications. As utilities and policymakers increasingly recognize the advantages of SMRs, coupled with substantial governmental support and favorable policies, this segment is set to contribute significantly to the nuclear landscape. The changes instigated by the Inflation Reduction Act are galvanizing nuclear investments in the U.S., despite regulatory challenges faced by the Nuclear Regulatory Commission (NRC), which require ongoing assessment and reform to enhance nuclear development. This policy landscape, combined with the rising demand driven by sectors such as data centers, indicates a pivotal time for nuclear energy to expand its role in the global energy market.

  • Furthermore, the integration of nuclear capabilities into digital infrastructure through potential cross-sector collaborations emphasizes the adaptability of nuclear energy in an advancing technological era. The proposed alignment of financing mechanisms and accelerated regulatory reviews highlights a collective commitment to ensure the integration of advanced nuclear technologies and to uphold their critical function in supporting reliable, low-carbon energy systems amidst a transitioning power landscape.

Global Nuclear Capacity and Country-Level Reliance

  • Current global nuclear capacity (395 GW in 2024)

  • As of 2024, the global nuclear capacity stands at 395 gigawatts (GW), marking a stable yet significant contribution to the world's energy mix. Nuclear energy has emerged as a critical player in the global effort to transition towards low-carbon energy sources, particularly in light of increasing demands for reliable and sustainable electricity. The steady performance of existing nuclear plants, coupled with advancements in reactor technology—such as small modular reactors (SMRs)—has been instrumental in maintaining this capacity level. The United States leads with 97 GW, followed by France with over 61 GW, while China is rapidly expanding its nuclear fleet, which has reached 56 GW as of 2024. These developments underscore the vital role of nuclear power in achieving energy security and reducing carbon emissions on a global scale.

  • Forecast to 494 GW by 2035

  • Looking ahead, global nuclear capacity is projected to increase to 494 GW by 2035, representing a compound annual growth rate (CAGR) of approximately 2% from 2024 levels. This growth is largely driven by a resurgence in nuclear interest across various nations, motivated by the need for energy diversification, technological advancements in reactor designs, and a strategic pivot towards decarbonization. Notably, market forecasts indicate that nuclear electricity generation will escalate from 2,616 terawatt-hours (TWh) to approximately 3,410 TWh over this period. The gains are expected to be particularly pronounced in several G20 nations that recognize nuclear energy's potential in meeting sustainable energy targets.

  • G20 countries’ nuclear share of electricity in 2023

  • In 2023, nuclear energy constituted a significant share of electricity generation across G20 countries. For instance, France, with a remarkable reliance of 65% on nuclear power, exemplifies the deep integration of nuclear energy into national energy strategies. Other countries, such as Slovakia and Ukraine, reported shares of 62% and 50%, respectively. These nations leverage nuclear energy to bolster energy security and achieve climate goals, reducing dependence on fossil fuels and minimizing carbon emissions. Conversely, countries with lower nuclear shares, such as the United States, which hovers around 20%, indicate the challenges posed by market competition from renewable energy sources and natural gas. The varied reliance on nuclear power among G20 countries demonstrates the distinct pathways nations are taking towards achieving energy transition and sustainability.

  • Implications for energy transition

  • The anticipated growth in global nuclear capacity and the varying reliance on nuclear energy among G20 countries carry significant implications for the broader energy transition. Nuclear power's ability to provide reliable baseload energy is increasingly seen as crucial in a landscape marked by variable renewable energy sources. Its expanding role is anticipated to contribute significantly to national efforts aimed at meeting carbon neutrality goals. As nations pursue strategic initiatives to decarbonize their economies, the continued investment in nuclear infrastructure—especially with the advent of SMRs—presents an opportunity to create a more resilient and sustainable energy framework. Moreover, the geopolitical landscape underscores the need for energy independence, making nuclear energy a focal point for national security and economic stability.

Small Modular Reactors: Market Trends and Strategic Developments

  • SMR market size and CAGR outlook (USD 6.09 Bn in 2025 to 7.70 Bn by 2032)

  • According to recent analysis, the Small Modular Reactor (SMR) market is projected to grow from an estimated value of USD 6.09 billion in 2025 to approximately USD 7.70 billion by 2032. This growth represents a compound annual growth rate (CAGR) of about 7.1%, highlighting increasing investment and interest in compact nuclear technologies that present a safer, more economical solution to energy demands. The rising need for clean energy generation is significantly fuelling the demand for SMRs, as these reactors can be deployed in various conditions where larger nuclear facilities may not be feasible, thereby expanding accessibility to sustainable power. Additionally, the modular design allows for mass production in factories, which offers economies of scale that can further reduce costs.

  • Key market drivers and growth factors

  • The growth of the SMR market is driven by several key factors. Firstly, the escalating global energy demand, spurred by population growth and urbanization, necessitates cleaner and more reliable source of energy. SMRs play a crucial role in meeting these demands by providing flexible and scalable energy production solutions that can adapt to various energy needs. Secondly, as nations aim to achieve their decarbonization goals amid increasing climate change initiatives, SMRs present a vital low-carbon alternative to fossil fuels. They not only contribute stable baseload power but can also complement renewable energy sources such as wind and solar, thereby enhancing energy security. Furthermore, substantial governmental support through favorable policies, funding, and incentives is accelerating the commercialization of SMRs, as seen in regions like North America and Europe, where dedicated programs are aiming to diversify energy sources away from traditional fossil fuels.

  • Realist approaches to SMR deployment

  • The deployment of SMRs necessitates a realist approach, given the various challenges and uncertainties involved in scaling new technologies. Acknowledging that SMRs must achieve price and performance parity with existing energy sources, stakeholders emphasize the importance of factory-based production processes to leverage economies of scale and ensure cost competitiveness. The U.S. Department of Energy is actively developing independent assessment capabilities to evaluate the pathways necessary for achieving such parity. Additionally, to address regulatory uncertainties surrounding SMR deployment, ongoing reforms at the Nuclear Regulatory Commission aim to modernize the existing frameworks and streamline approval processes. Such efforts are critical to facilitating the scale-up of SMRs while establishing a credible market presence amidst increasing international competition, particularly from nations like China and Russia.

  • Wyoming’s shift toward next-generation nuclear technologies

  • Wyoming is increasingly positioning itself as a leader in the transition to advanced nuclear technologies, leveraging its abundant uranium reserves and the recent legislative support for new reactors. The state has witnessed significant developments, notably the construction of a sodium-cooled reactor by TerraPower. This project is not only set to provide cleaner energy but is also anticipated to create jobs and foster local economic growth by repurposing a retired coal plant site. The move highlights Wyoming’s strategy of integrating SMRs into its energy portfolio, aimed at ensuring energy security in response to the decline of coal. Plans to enable off-grid applications for SMRs further underscore Wyoming's commitment to innovating within nuclear energy that responds swiftly to industrial energy demands, particularly in remote areas. The state’s collaborative efforts, such as those involving local businesses and research institutions, aim to translate advanced nuclear technologies into practical solutions, positioning Wyoming as a potential hub for next-generation nuclear power.

U.S. Policy Framework and Regulatory Dynamics

  • Impact of the 2022 Inflation Reduction Act on nuclear investments

  • The 2022 Inflation Reduction Act (IRA) has emerged as a significant catalyst for revitalizing nuclear energy investments in the United States. The IRA’s technology-neutral tax credits have been particularly impactful, as they offer financial incentives applicable to any carbon-free electricity source, including nuclear power. Notably, nuclear energy has historically faced challenges due to its lengthy construction and permitting timelines. This contrasts sharply with the rapid development cycles of other renewable energy technologies, such as solar and wind.

  • As of May 1, 2025, discussions surrounding the fate of these tax credits in Congress are ongoing. Analysts suggest that the IRA has the potential to materially enhance the competitiveness of nuclear projects by lowering their Levelized Cost of Energy (LCOE). This is crucial as nuclear energy plays a vital role in ensuring grid reliability and stability, especially in light of increasing electricity demands driven by sectors like data centers and electrification of manufacturing. Therefore, the outcome of these discussions could have consequential implications for nuclear investments in the coming years.

  • Federal shifts in energy and water infrastructure funding

  • The Biden Administration has initiated a profound reassessment of federal funding allocations for energy and water infrastructure, signaling a shift toward increased domestic fossil fuel production and a reallocation of resources away from renewable and clean energy programs. Executive Order 14154, known as "Unleashing American Energy," highlights this pivot by formally pausing disbursements from the IRA and other initiatives that previously supported clean energy projects.

  • As a result, the ongoing funding landscape for nuclear energy remains precarious. Existing federal assistance, such as obligated federal aid, enjoys legal protection; however, future unobligated funds are at risk of reprogramming or cancellation. Programs specifically tailored for nuclear energy, including the DOE's Grid Resilience and Innovation Partnership (GRIP), may face severe funding challenges as the administration's energy priorities evolve. This fluid environment necessitates that nuclear stakeholders closely monitor federal funding developments to navigate strategic planning effectively.

  • Legal challenges facing the U.S. Nuclear Regulatory Commission

  • Recent legal challenges to the U.S. Nuclear Regulatory Commission (NRC) have underscored growing concerns regarding its regulatory framework and its impact on nuclear innovation and development. As of May 1, 2025, several states and nuclear startups have filed lawsuits against the NRC, arguing that its stringent regulations have stymied new reactor construction and innovation in the nuclear sector.

  • The lawsuit specifically criticizes the NRC's lengthy permitting processes, which have contributed to a stagnation in new reactor deployment in the United States over the last two decades—only three reactors have been brought online during this time. Advocates for nuclear energy assert that the NRC’s regulations should allow for more flexible approaches, especially for small modular reactors (SMRs), which are inherently less dangerous due to their smaller size. This legal landscape reflects significant dissatisfaction among industry stakeholders and may drive calls for reform within the NRC to facilitate a more conducive environment for nuclear energy development.

  • Investor perspectives on nuclear stocks (Vistra Corp. analysis)

  • Recent analyses of investor perspectives on nuclear energy stocks highlight a complex landscape influenced by various market dynamics. A report discussing Vistra Corp. has positioned it as a significant player in the nuclear energy market, amidst an increasing public and private sector interest in bolstering nuclear capacity to meet future electricity demands. Despite nuclear power’s contributions, with nearly 20% of U.S. electricity supplies stemming from nuclear as of 2024, market conditions, including a 37% decline in uranium prices since January 2024, have prompted volatility in nuclear stocks.

  • Investors are closely observing the potential impact of the IRA, as it could incentivize a resurgence in nuclear development and subsequently, investor confidence in nuclear stocks. Furthermore, the growth of data centers and the projection of nuclear power to fulfill a share of the rising electricity demand in this sector demonstrate the strategic importance of nuclear investments as industries pivot toward sustainable, low-carbon energy solutions. Looking ahead, the evolving landscape for nuclear stocks will likely be influenced by regulatory outcomes, market shifts, and continued public support for nuclear expansion.

Nuclear Power’s Role in Emerging Energy Demands

  • Nuclear as a baseload option for data center growth

  • As the electricity demand continues to surge, particularly due to the rapid proliferation of data centers driven by advancements in artificial intelligence, nuclear energy is increasingly being considered a viable solution. Data centers are expected to see their electricity consumption spike substantially, with estimates suggesting a five-fold increase by 2035, reaching a need for 176 gigawatts (GW). Nuclear power, which already provided over 19% of the United States’ electricity in 2024 while accounting for less than 8% of total operational capacity, stands out as a reliable baseload energy source. Due to its very high capacity factor—exceeding 92.5%—nuclear facilities can deliver consistent power round the clock, unlike other energy sources, thus ensuring the uninterrupted operation of energy-intensive data centers.

  • The ability of nuclear power to generate firm baseload electricity positions it as an attractive option for the specific needs of data centers, which often require a constant power supply to manage servers and associated infrastructure effectively. Given the considerable energy density of nuclear fuel, a relatively small amount can yield vast amounts of electricity, translating into efficient energy generation and minimizing the land footprint required for energy infrastructure.

  • Integration of SMRs into critical infrastructure

  • Small modular reactors (SMRs) represent a significant advance in nuclear energy technology, designed to be smaller in scale compared to conventional nuclear reactors. This compact design allows for factory assembly and easier transportation and installation at sites where energy demand is growing, particularly in proximity to data centers. SMRs can generate anywhere from 50 MW to over 800 MW of electricity, making them exceptionally suitable for meeting the rising energy demands of data centers, which now often require substantial electricity inputs for operations.

  • Moreover, the relatively scalable power output of SMRs means they can be deployed in increments appropriate to the precise energy needs of a project, reducing both the initial capital investment and construction risks associated with larger nuclear projects. Integration of these advanced reactors into critical infrastructure will allow for a less disruptive expansion of energy capabilities tailored to specific regional demands.

  • Challenges and opportunities in power reliability

  • While nuclear energy offers a multitude of benefits in addressing emergent energy demands, challenges persist. Cost overruns and construction delays have historically plagued nuclear projects, leading to hesitancy among investors and stakeholders. For instance, a recent nuclear project experienced a cost overrun exceeding 114% and a delay of six years due to intricate engineering processes and regulatory complexities. However, advancements in modular construction techniques and digital tools can facilitate more expedited project management and potentially minimize these issues in future deployments.

  • In light of these challenges, there is also a growing opportunity to leverage the technological prowess of nontraditional market entrants, such as tech companies and private equity firms, who are increasingly investing in nuclear projects. By fostering strategic partnerships, the nuclear sector can harness innovative financing models that may alleviate some financial barriers and enhance public perceptions of nuclear power as a safe and reliable energy source. Engaging stakeholders in a transparent dialogue and demonstrating nuclear's safety and environmental benefits are crucial for capitalizing on its potential to meet fast-rising energy demands.

Wrap Up

  • The developments outlined as of May 1, 2025, illustrate that nuclear energy is at a transformative phase, fueled by international initiatives, policy directives such as the Inflation Reduction Act, and innovative efforts in the sector. The projected growth in nuclear capacity signals a profound shift towards low-carbon energy strategies, particularly within G20 nations, which are increasingly recognizing the indispensable role of nuclear power in achieving sustainable energy goals. Furthermore, the U.S. has positioned itself to benefit from a renewed readiness to invest in nuclear infrastructure, provided that regulatory clarity emerges in response to ongoing litigation surrounding the NRC's role and regulatory frameworks.

  • As the importance of SMRs comes to the forefront, these compact reactors promise to enhance energy security while accommodating the specialized demands of operations, particularly in sectors reliant on stable electricity supplies, such as data centers. Stakeholders are encouraged to foster strategic partnerships across industries and streamline financing mechanisms consistent with modular project timelines. By prioritizing regulatory reforms to expedite the licensing process and create a favorable investment climate, a more conducive environment for nuclear energy can be developed. Such measures are essential in ensuring that nuclear energy not only significantly contributes to global decarbonization efforts but also fortifies energy security in both traditional and emerging markets.

  • Looking forward, the alignment of nuclear energy policy with technological advancements will be pivotal as nations navigate an interconnected energy landscape fraught with challenges and opportunities. As the sector evolves, continued vigilance on regulatory developments and stakeholder engagement will be critical for achieving broader adoption of nuclear solutions, safeguarding nuclear energy's place as a cornerstone of a resilient, low-carbon future.

Glossary

  • Nuclear Energy: A form of energy produced through nuclear reactions, primarily fission, where atomic nuclei are split to release energy. As of May 1, 2025, nuclear energy plays a critical role in providing low-carbon electricity globally, contributing to efforts in sustainability and energy diversification.
  • Small Modular Reactor (SMR): A type of nuclear reactor that is designed to be smaller and more flexible than traditional reactors. SMRs can be assembled in factories and transported to locations for quicker installation. Market projections indicate SMRs could reach a value of approximately USD 7.70 billion by 2032, driven by increasing interest for cleaner energy solutions.
  • Global Capacity: Refers to the total amount of electricity generation capacity available from power plants. As of May 1, 2025, the global nuclear capacity is 395 gigawatts (GW) and is expected to rise to 494 GW by 2035, highlighting the growing reliance on nuclear energy.
  • Inflation Reduction Act (IRA): A U.S. federal policy enacted in 2022 aimed at stimulating investments in low-carbon energy sources. As of May 1, 2025, the IRA has influenced nuclear energy investments through technology-neutral tax credits, potentially improving the economic viability of nuclear projects.
  • Nuclear Regulatory Commission (NRC): The U.S. government agency responsible for regulating civilian use of nuclear energy. As of May 1, 2025, the NRC faces legal challenges regarding its regulatory framework, which some argue hampers nuclear innovation and development.
  • Federal Investment: Government funding allocated towards various sectors, including energy. Continuous federal support is crucial for the advancement of nuclear energy projects, yet as of May 1, 2025, there are concerns about potential reallocations away from clean energy initiatives, impacting nuclear funding.
  • Data Centers: Facilities used to house computer systems and associated components, such as telecommunications and storage systems. The demand for energy from data centers is projected to surge, making reliable sources like nuclear energy increasingly important to meet their electricity needs.
  • Regulatory Challenges: Obstacles faced by industries in adhering to laws and regulations. The nuclear energy sector, particularly as of May 1, 2025, is experiencing regulatory challenges that could delay project timelines and affect market confidence.
  • Capacity Factor: A measure of how often an energy facility is running at maximum power compared to its potential output. Nuclear power has a high capacity factor (over 92.5%), allowing it to generate consistent and reliable electricity, which is particularly beneficial for power-intensive operations.
  • Terawatt-Hours (TWh): A unit of energy commonly used to measure electricity production (1 TWh equals 1 billion kilowatt-hours). As of May 1, 2025, global nuclear electricity generation is projected to rise from 2,616 TWh to approximately 3,410 TWh by 2035.
  • Compound Annual Growth Rate (CAGR): A metric used to calculate the annual growth rate of an investment over a specified period of time. It indicates expected future growth, such as the projected CAGR of 7.1% for the SMR market from 2025 to 2032.

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