On the sidelines of Climate Week in New York City #NYCW24, a gathering of finance, tech and industry leaders signaled a major shift in how the world views nuclear energy.

Climate Week covers all aspects of the United Nations sustainable development goals (SDGs), with the theme for 2024 “It’s Time”, emphasizing the need for climate action and a rapid energy transition – an area in which nuclear energy has a significant role to play.

At the Net Zero Nuclear financing summit, 14 of the world’s largest and most influential financial institutions chose to endorse the Declaration to Triple Nuclear Energy launched at COP28 in 2023. The announcement was reported in the FT, Forbes, Business Insider, CNBC, Reuters, and many more. But what does it mean?

As discussions between financiers and industry unfolded, it was clear a consensus has emerged: the world needs vast amounts of low-cost, low-emission energy continuously – and that means more nuclear. A lot more nuclear.

The question now is: how can this be delivered?

While nuclear plants have relatively low running costs, they take large sums of money to build, therefore any credible answer to that question must directly address the cost of capital. This event demonstrated the resolve of the industry on this point, and the new lens through which the finance community is viewing investments in nuclear.

Here are three big takeaways, illuminated by speakers at the financing nuclear forum:

1.   Tech giants need nuclear, and are providing new streams of investment

The computing needs of artificial intelligence (AI) will create a staggering demand for reliable, 24/7 clean energy. With news last month of Microsoft historic agreement with Constellation to restart Three Mile Island and power data centres, providing clear signal of this demand.

Jason Rekate, Global Head of Corporate Banking at Citi, summed up the challenge:

“The power demand curve that we should all be looking at looks nothing like what it was three years ago when we were making our net zero commitments. If we’re going to make any progress on net zero, on converting the world to less fossil fuel usage, we’re going to need nuclear.”

The unique energy requirements of data centres mean that tech giants are now committed to climate targets that cannot be achieved without large amounts of new nuclear, as Peter Freed, Former Director of Energy Strategy at Meta explained:

“A data centre for all intents and purposes is a block load. So it runs all the time. If you start thinking of matching a block load with a generation profile, there’s not a lot of things that can meet that.”

James Schaefer of Guggenheim Securities stressed that the large tech companies will need to play an active role to secure the power that they need:

“Long-term contracts, if not direct investments, are absolutely critical from that crowd.”

2.   Investors are warming up, pragmatism prevails The recent change in approach and attitude towards nuclear energy among banks and investors is profound – and it is driven by a new pragmatism about the material and economic realities of transitioning an entire energy system.

As Séverine Mateo, Global Head of Low Carbon Transition Group at BNP Paribas put it:

“Financial institutions are increasingly seeing nuclear as an interesting asset class. This is a stark change from the position two or three years ago.”

And that shift is echoed across the industry. Sarah Thompson, Head of Sustainable Finance at RBC Capital Markets noted:

“Historically, sustainability-focussed investors didn’t just not invest in nuclear, they had explicit exclusions against doing so.”

3.   Reliable project delivery remains key to attracting capital long-term

Whilst offtake agreements, access to sustainable finance, and policy and regulatory certainty are all necessary, the reliable delivery of projects remains the critical component needed for attracting both debt and equity at competitive rates in the long term.

Jason Rekate, Global Head of Corporate Banking at Citi, stated it clearly:

“The biggest problems that remain are the long tenor and the potential for cost overruns”

While Dr Sama Bilbao y Leon, Director General of World Nuclear Association, grounded the discussion in reality, calling on all parties to come together and deliver,

“Beautiful rhetoric and declarations, they are all very important and certainly inspiring to create momentum but at the end of the day they will not by themselves build any new nuclear power plant…

Achieving a tripling of global nuclear capacity by 2050, is going to require the commitment and ingenuity of policy makers, the finance community and of course the nuclear industry as well as many others to translate this ambition into action.”

This article was produced by World Nuclear Association.

Financing the Tripling of Nuclear - Net Zero Nuclear Forum was held on 23 September 2024, at Rainbow Room, Rockefeller Center during New York climate Week, and co-organised by Net Zero Nuclear. Net Zero Nuclear is a transformative initiative that calls for unprecedented collaboration between government and industry to at least triple global nuclear capacity and achieve carbon neutrality by 2050. Join the initiative as a Strategic Partner to help demonstrate the essential role of nuclear energy in achieving Net Zero. Please get in touch at contact@netzeronuclear.org .