Is nuclear power key to the global energy transition?
As countries seek reliable and low-carbon energy sources, nuclear power’s role in the global pivot has become a point of contention.
In a nutshell
- Several countries plan to increase nuclear capacity significantly
- AI and tech firms are willing to pay a premium for atomic energy
- Cost-competitiveness and safety are hurdles for the sector's growth
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Global conversations about climate change and the rise of small modular reactors (SMRs) have sparked renewed interest in nuclear power worldwide. Unlike renewables such as wind and solar, which rely on weather and daylight, nuclear power does not face the issue of intermittency, as it provides a constant source of energy. It also enhances energy security and reduces reliance on fossil fuel imports from geopolitically unstable regions.
However, nuclear power’s share of global electricity generation has declined by nearly half from its peak of around 17 percent in 1996. Currently, only 415 nuclear reactors are operated worldwide, with a combined capacity of 375 gigawatts (GW). Yet, nuclear power is undergoing a revival as a vital and sustainable energy option.
Europe has 102 nuclear power reactors that generate approximately 97 GW, accounting for around a quarter of the continent’s electricity supply. While Germany shut down its last three nuclear power plants in April 2023, France, the United Kingdom, the Czech Republic, Hungary, Bulgaria, Romania and Sweden plan to considerably expand their nuclear capacity.
France aims to build at least six new reactors, with the potential to increase to 14 in the near future. The Netherlands and Poland, which currently do not operate nuclear power plants, have announced plans to build new facilities. Italy, which phased out nuclear power in 1990, is now considering reintroducing it into the national energy mix.
While Europe steadily advances its nuclear ambitions, the most substantial growth is occurring in Asia. China is on track to become the world’s largest producer of electricity generated by nuclear reactors, aiming to raise the share of nuclear power in its energy mix from 5 percent in 2021 to 18 percent by 2060.
China and Russia make up over two-thirds of the nuclear reactors currently under construction. More than 60 nuclear reactors are being built (including 21 in China alone) worldwide, and plans are in place for an additional 110, 70 of which are in China. While South Korea aims to maintain its nuclear share in the energy mix at around 30 percent going forward, Japan has permitted its existing 14 reactors to operate beyond the 60-year limit and is considering constructing new reactors. This year, the share of nuclear power could reach record levels, though it is largely concentrated in China and India, which together account for 50 percent of the anticipated capacity. This resurgence, however, comes with its own set of challenges.
Facts & figures
New nuclear reactors under construction
Critics argue that nuclear power is more expensive than renewable energy sources and its proponents often overlook or underestimate the costs of storing nuclear waste. Moreover, Russia’s invasion of Ukraine, which has included the capture of the Chernobyl Nuclear Power Plant and attacks on the Zaporizhzhia Nuclear Power Plant, has highlighted serious safety and security concerns regarding civilian nuclear infrastructure.
The potential of small nuclear reactors
Constructing new large-scale conventional nuclear power plants is expensive and often relies on government subsidies. In contrast, new reactors offer the ability to recycle spent nuclear fuel, resulting in a significant reduction in waste. SMRs designed with prefabricated components are expected to be more affordable and cost-competitive with renewable energy sources. Additionally, they come equipped with improved safety features and generate considerably less nuclear waste. SMRs can generate up to 400 megawatts (MW) per unit, roughly a third of the output of traditional nuclear reactors. They can also be designed to operate at much lower capacities, ranging from just 1-10 MW. Emerging nuclear technologies have the potential to address the growing global demand for electricity, which is essential for advancing green hydrogen production.
Advocates are optimistic that by 2050, SMRs will capture around 10 percent of the global nuclear power market. More than 80 SMRs are in the development phase across 18 countries. Designs vary in size, coolant type and fuel, including a high-assay low-enriched uranium (HALEU), which offers a fuel life of three to 30 years, compared to the one to two years of traditional nuclear plants. France and the UK have also announced plans to develop advanced SMRs.
Artificial intelligence companies and major United States technology giants such as Amazon and Google are further driving demand. Their AI projects fuel massive growth in electricity demand due to the establishment of large-scale data centers. These firms strongly favor nuclear power and SMRs and are willing to pay a premium for it.
Facts & figures
Number of global SMR designs by power capacity
Global expansion of nuclear power
Unlike renewable energy sources, nuclear power stands out for its reliability. It can be a viable alternative to coal and other fossil fuels that emit much higher levels of carbon dioxide. Furthermore, nuclear power plants require less frequent refueling and are more land-energy efficient, as they generate more power with less land. These plants produce approximately 57,000 megawatt-hours (MWh) per year for each acre of land, which is 18 times more efficient than wind and 285 times more than solar.
During the 2023 United Nations Climate Change Conference, also known as COP28, world leaders agreed that nuclear power is essential for the global energy transition and for achieving net-zero emissions targets. At the summit, 22 countries committed to tripling their nuclear capacity by 2050. In March 2024, 34 countries, including the U.S. and China, agreed “to work to fully unlock the potential of nuclear energy.”
Despite $2 trillion invested in clean energy initiatives globally in 2024, only $80 billion is currently allocated to nuclear power – half of what is needed to reach the goal of tripling worldwide nuclear capacity.
Key challenges limiting nuclear power’s growth
Cost competitiveness
Renewable energy sources such as solar and wind, even when factoring in the costs of battery storage, have proven to be more economical for the energy transition. Meanwhile, nearly all new nuclear reactors around the globe are experiencing years of delays and their costs continue to escalate.
Facts & figures
Global nuclear projects face massive delays
- In July 2023, the first new nuclear reactor began operating in the U.S., seven years late and $16 billion over budget, costing a total of $30 billion.
- In Finland, the OL3 reactor began operations in 2023 after a 14-year delay and an $8 billion budget overrun, resulting in a total cost of $11 billion.
- In France, Electricite de France (EDF), a state-run electric utilities company, has seen costs for its six new reactors jump 30 percent to 67 billion euros.
- In the UK, EDF and China National Petroleum Corporation are still constructing the 3.3 GW Hinkley Point C reactor. The reactor is already at least seven years behind schedule, initially projected to begin operations in 2020. It is unlikely to commence operation before 2027, and some reports suggest construction could extend as far as 2036. Originally estimated to cost about GBP 20 billion, the budget has ballooned to at least GBP 33 billion due to the 7,000 design changes that required 35 percent more steel and concrete.
The cost overruns of SMRs can be managed more effectively and spread throughout their development and operational lifetimes compared to the typical $15-20 billion incurred by traditional nuclear power plants during construction. SMRs are expected to reduce costs from $120 per MWh to $40-65 per MWh. However, critics claim that SMRs remain too costly, take too long to construct and pose too many risks to meaningfully impact the global energy transition aimed at replacing fossil fuels.
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As mentioned earlier, most cost comparisons with renewables exclude or downplay nuclear waste storage costs, skewing economic analyses. In Germany, the underestimated costs of safely storing nuclear waste over centuries continue to rise, highlighting global challenges in responsibly managing nuclear legacies.
Building a nuclear supply chain independent of Russia
Although Russia, through its state-owned enterprise Rosatom and its subsidiaries, mines only 5 percent of the world’s uranium supply, it controls 40 percent of global processing facilities and 46 percent of total enrichment capacity. Russia also holds roughly two-thirds of the reactor export market and supplies nuclear fuel to 78 power plants across 15 countries.
In Europe, 15 of the 102 nuclear reactors were built using Soviet-era technology and are designed to operate with Russian nuclear fuel. Even U.S. nuclear power plants sourced 27 percent of their enriched uranium from Russia in 2023. The company is a leading supplier in the U.S. uranium market, the single largest buyer of enriched Russian uranium. Rosatom continues to supply several Central and Eastern European countries, as well as France. The Russian state-owned company is also the world’s largest constructor of nuclear power plants. It is currently building six new nuclear power plants domestically, supporting 19 reactors in six other countries. Its export project plans run up to $200 billion in 40 countries.
Similar to Gazprom, the Kremlin is leveraging Rosatom and its global nuclear operations and investments, along with its established “nuclear partnerships,” as tools to enhance its geopolitical and geoeconomic influence. This strategy is particularly significant during a global energy transition where the demand for electricity is rapidly rising.
Neither the European Union nor the U.S. has included nuclear power, Rosatom nor the Russian nuclear fuel supply chain in their sanctions lists. Consequently, 18 Russian-made reactors across Finland, Bulgaria, Slovakia, Hungary and the Czech Republic continue to rely on Russian fuel.
The EU doubled its nuclear fuel imports from Russia compared to the previous year, spending $720 million in 2022, a 22 percent increase from 2021. France has ramped up its imports of nuclear products by 250 percent over the same period. Rosatom is expanding its global footprint by constructing new nuclear reactors in countries such as Hungary, Turkey, Egypt and Morocco.
A renewed focus on nuclear energy in Western countries could increase reliance on Russia, which has leveraged Europe’s gas imports to advance its geopolitical goals, sometimes pressuring Western European nations. In its ongoing war in Ukraine, the Kremlin has already boosted its export revenue through its uranium supply chain.
Facts & figures
Global uranium production, 2023
Most EU countries (except Hungary) and the U.S. under the Biden administration, which supported the construction of new nuclear power plants, aim to reduce Russian nuclear fuel imports and create an alternative supply chain to phase out Russian reliance in the medium term. An alliance between the UK, U.S., Canada, Japan and France to secure a reliable nuclear fuel supply chain was announced in April 2023, though it will take years to materialize. This agreement was explicitly made to end Russia’s monopoly on the production of HALEU for SMRs.
The U.S. House of Representatives passed legislation in 2023 to ban Russian uranium imports by 2028, but it has not been approved by the Senate. Since the beginning of 2024, three uranium mines have begun production in the U.S. after eight years without domestic production.
Uranium extraction and enrichment represent two distinct stages in the nuclear supply chain. Enrichment capabilities in the U.S. are limited, relying on a single small nuclear fuel company for new reactor designs. Nevertheless, several industrial groups and startups are actively developing new reactor designs that can use recycled nuclear fuel. This innovation has the potential to reduce Western reliance on Russian nuclear fuel imports.
Many countries will continue to rely on Russia for fuel exports, as Rosatom’s subsidiary Tenex is currently the sole provider of commercially available HALEU fuel. To offset Western sanctions, Russia aims to strengthen its nuclear business in Africa by increasing both the sale and construction of new nuclear reactors, as well as gaining control over existing and new uranium mines, often through joint ventures with Iran, in countries like Niger.
Scenarios
Less likely: Nuclear power will play a big role in the global energy transition
The global demand for electricity driven by the AI industry could trigger a surge in worldwide energy needs. As AI and tech companies rely heavily on data centers that need a stable and high-capacity power supply, there is increasing concern about securing reliable energy sources. According to the International Energy Agency, data centers might require more energy by 2030 than Japan’s present entire energy consumption. They are expected to drive over 20 percent of the growth in global electricity demand in advanced economies through 2030, though they will only make up about 10 percent of the overall increase in global electricity consumption.
In the global AI race, nuclear power could play a crucial role. Given the limited options for electricity storage and its associated costs, relying on gas power plants may either result in higher carbon dioxide and methane emissions or drive-up prices, especially when paired with energy-intensive carbon capture and storage technologies.
Currently, it remains uncertain whether new nuclear reactors, such as SMRs, will genuinely become cost-competitive with renewable energy sources when combined with battery storage or other emerging technologies. The least likely scenario, then, is that nuclear power, including SMRs, will play a key role in the mid- to long-term outlook of the global energy transition.
Meanwhile, insights from the Chinese AI firm Deepseek suggest that data centers’ future electricity demand could be significantly lower than Western tech giants like Amazon, Microsoft, Meta and Alphabet have projected. Unlike the energy-intensive AI language models these companies have relied on, Deepseek’s advancements indicate that more efficient approaches could reduce power consumption.
More likely: SMRs will boost nuclear power demand if challenges are addressed
In a likely scenario, SMRs could boost nuclear power globally and substantially increase their share in the worldwide energy mix. However, for this to happen, several major challenges must be addressed: achieving cost competitiveness, gaining public acceptance in Europe, establishing an alternative nuclear fuel supply chain to reduce reliance on Russia and making sufficient investments in new uranium mines. Addressing these issues and navigating this mid-term outlook successfully will require time, strong political will and effective leadership.
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