Reactors to play key role in diversifying energy sources while ensuring stable and secure electricity supply, IEA says
Investment in the nuclear energy industry is making a comeback, rising by 50% over the past five years with spending on new nuclear plants and refurbishments set to exceed $70bn (€61bn) and the promise of further growth given the “burgeoning interest” in new technologies such as small modular reactors.
According to the latest edition of the International Energy Agency’s World Energy Investment report, over 8 GW of new nuclear reached a final investment decision in 2024 as nuclear investment continued its comeback, despite elevated geopolitical tensions and economic uncertainty.
The report says capital flows to the energy sector are set to rise in 2025 to $3.3tn, a 2% rise in real terms on 2024 with around $2.2tn going collectively to renewables, nuclear, grids, storage, low-emissions fuels, efficiency and electrification – twice as much as the $1.1tn going to oil, natural gas and coal.
Nuclear could account for over 25% of electricity supply in 2035 – up from International Atomic Energy Agency estimates of around 9% today – and will play a key role in diversifying energy sources while ensuring a stable and secure electricity supply.
However, over the next decade, government involvement will be essential for large-scale investments in nuclear, the report warns.
Big Tech Boost For SMR Industry
Growing small modular reactor (SMR) demand from the tech industry could be a tailwind for nuclear in the coming years, but new growth is currently attributable mainly to Chinese investment in large-scale reactors.
While renewables are expected to meet most additional data centre electricity demand, there has been considerable interest in next generation energy solutions, foremost among them SMRs.
In addition to being more easily financed and tailored to project specifications, the draw of nuclear for data centres stems from its “flat load profile”, which means a nuclear plant produces electricity at a constant, maximum power output for a large portion of the time, unlike some renewables.
The report says this has led to numerous power purchase agreements and other agreements between major technology companies, contributing about 27 GW of capacity from new or recommissioning mothballed reactors, mostly in the US, but also in India, Japan and South Korea.
Growth-stage investment in nuclear startups rose by around 210% in 2024, potentially driven by interest in the provision of firm power, for example for data centres. The largest growth-stage deals in 2024 were in electric vehicles and nuclear fusion.
As of Q4 2024 about 26 GW of nuclear – mostly SMR – agreements have been reached between US technology companies and developers. This has been enabled by deep financial markets and a domestic venture capital ecosystem, which have helped drive early-stage growth of new technology developers such as Bill Gates’ TerraPower, X Energy Fervo Energy and many others.
China Ushers In New Era Of Investment
The report says China is ushering in a new era of energy investment, fostering increased private sector participation in key domestic projects.
One significant example of this shift is in China’s nuclear power sector, a critical pillar of the country’s energy security.
For years, nuclear projects in China were controlled by a few state-owned enterprises with local governments taking on minority roles.
However, in 2024 China approved five new nuclear projects that introduced private capital into the sector for the first time, with private enterprises allowed to hold up to 10% equity.
“This move demonstrates China’s willingness to allow private sector involvement to complement the state’s traditional role as a financier and operator,” the report notes.
Eurasia is an important centre for nuclear power, with Russia a leader in nuclear energy design and construction. Since 2017, 45% of the nuclear reactors under construction worldwide use Russian designs.
Kazakhstan and Uzbekistan are planning their first nuclear power plants, while Kyrgyzstan is considering deploying an SMR with a capacity of 110 MW.
Uzbekistan signed an agreement with Russia’s state nuclear corporation Rosatom in 2024 for the construction of small-scale nuclear reactors. However, Kazakhstan is exploring multiple international partnerships for its nuclear ambitions, reflecting a diversification strategy that reduces reliance on Russian technology.
As a part of a broader strategy to meet sharply rising electricity demand, India is working to diversify its power generation mix by promoting investment in nuclear.
For the current financial year, India has also committed $245m to nuclear power projects, with the long-term vision of 100 GW of nuclear capacity by 2047, up from less than 10 GW today.
Construction of Russia-supplied nuclear units at Akkuyu in Turkey. Since 2017, 45% of reactors under construction worldwide use Russian designs.
