How investors weigh the risk in the middle of the growing demand for nuclear energy

London – The growing demand for energy has rekindled interest in nuclear energy, but large demands in terms of capital and an uncertain political and regulatory climate raise questions about the tax capacity of the sector.

The giants of technology pump money in nuclear energy investments, seek to supply the data centers with high energy intensity and carry out their AI ambitions.

AI and data centers are “Canary in the Coal Mine”, the Director General of the World Nuclear Association, Sama Bilbao y León, told CNBC before the conference. “We finally recognize that the demand for electricity and energy in general will only increase. But the reality is that all the sectors of the economy will need more electricity.”

In addition to AI, applications range from nuclear energy to the metallurgical industry, which seeks to electrify as quickly as possible to the chemical, maritime and sea sectors, said León.

The question of how to respond to the growing power needs of the world has taken the front of the stage as leaders of the largest companies, experts and investors of uranium and nuclear energy in the world met for the annual symposium of the World Nuclear Association (WNA) at the Royal Lancaster London Hotel last week.

Beginning of discussions at the conference, Leon told participants in his host speech that the event is a “work summit” which sought to pass a simple conversation.

Investments in the nuclear value chain until 2025 should increase to 2.2 billions of dollars, according to estimates by Morgan Stanley, up in relation to a 2024 billion of $ 1.524. This level of investment raises questions about the role of government, banks and other financial players to provide sufficient tax capacity.

Nuclear energy would provide a more reliable 24/7 energy source compared to renewable energies, which can be more intermittent. The development of small modular reactors (SMR) provides a more scalable energy solution due to their size. According to the IAI, the recovery period of an SMR investment is half of the usual period of 20 to 30 years for projects on a larger scale.

But SMRs have not yet reached the commercial stadium, and most of the planned projects will not be online before 2030. Although an important amount of money is promised, there has been no new large-scale nuclear projects in the United States in the past 15 years.

“The first positive story with regard to the financial sector with regard to nuclear power, is that they are open to nuclear financing,” CNBC Mahesh Goenka, founder of Market and Commercial Advisory told CNBC. “It was not history a few years ago when many banks did not want to touch nuclear projects. This has changed. The question remains now, do they have the risk of risks to finance nuclear projects?”

The challenges include exaggerated budgets, late delivery of projects due to the long periods of construction management, the technical complexity of initiatives and the difficulties in obtaining licenses.

Goenka compared the West to China, where financial institutions are happy to finance nuclear projects because they can be delivered in time and a budget – leading to better margins than on other infrastructure projects. Meanwhile, the West has not built many new reactors for a very long time, so the learning rate is not yet there, he said.

Almost all nuclear generation capacities in the United States come from reactors built between 1967 and 1990, without new constructions before 2013, when work began on Vogtle units in Georgia. Meanwhile, the last factory to be built in the United Kingdom was Sizewell B, which started operating in 1995.

Nuclear investments are “intrinsically political projects,” said Mark Muldowney, director general of energy, resources and infrastructure at BNP Paribas. He noted that, although customers are much more receptive to investments, uncertainty about cost and construction time remains.

“We are several years away from the situation in which techniques such as the financing of projects can be used by themselves to finance large nuclear power (projects),” he said during a round table.

“It will not be the entrepreneurs, even if they were ready to do so, and overall they are not, they will be paid by some of the risks that sit with these projects. So it will be a government, or it will be electricity consumers in this country, and in certain places that could be intermediate by public services.”

The nuclear power plants are among the most high -intensity of capital. The United Kingdom, for example, has enlightened the construction of a nuclear power plant with two massive reactors on the Suffolk coast which will generate 3.2 Gigawatts of electricity – enough, says the government, to provide a power to the equivalent of 6 million houses. But the costs of the project mainly belonging to the government increased to 38 billion pounds sterling, exceeding an initial target of 20 billion pounds sterling.

Other major projects have encountered similar problems. The Vogtle factory in Waynesboro, Georgia, ran several years late and was a budget that has more than doubled during development. The Hinkley Point Nuclear Point in the United Kingdom has faced many concerns concerning security risks during its first steps, as well as a budget which increased to around 40 billion pounds sterling.

Trevor Myburgh, senior manager of Corporate Finance Advisory at ESKOM, stressed that the private sector cannot be a “miracle solution” and solve the problem of nuclear energy financing.

Public private partnerships will be “crucial” in nuclear development, especially in any emerging economy, Myburgh said during a round table on Wednesday.

While some European countries such as Switzerland – which are currently banning the construction of any new nuclear power plant, but has written legislation to raise this motion – and Germany remains unfavorable to nuclear energy, other governments such as those in the United Kingdom, France and the United States have relied on the energy source.

Earlier this year, US President Donald Trump has signed a number of decrees designed to quickly monitor the development of nuclear reactors and quadruple nuclear generation capacity by 2025.

Such actions of the Trump administration have put positive nuclear energy policies “on steroids,” said Scott Melbye, CEO of Corp Uranium Royalty Corp.

“What we see are real concrete measures taken by this administration to stimulate not only the construction of small modular reactors, advanced reactors and large reactors, but also (also) in the fuel cycle,” Melbye told participants in WNA.

Investor Arfa Karani noted the growing interest of the investor community to find opportunities with startups, in particular those that provide adjacent nuclear technology.

The British government, in particular, has adopted a more “practical” approach to help the founders understand how to invest in clean technology, she said.

“The regulations must arise. It is no longer a question of, where do we take the capital? …. because now suddenly, it has become a question of national security and global power and global domination,” she told CNBC, adding that the commitment to the State to finance the AI ​​and the nuclear has meant that “all the insoluble problems are suddenly solvent, which is very exciting for nuclear.