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Electric Power, Nuclear
February 12, 2025
HIGHLIGHTS
Hyperscalers will move beyond just signing offtake deals
NEI expects applications for four new reactors within two years
Nuclear power in the US is on the cusp of significant capital investment as hyperscalers push deployment of more reactors and regional utility groups jointly build small modular units, the head of Wall Street investment firm Guggenheim Partners said.
One of the biggest challenges holding up deployment of nuclear reactors in the US has been that the utilities that would own the units are too small to finance the multi-billion projects, said Alan Schwartz, executive chairman of Guggenheim Partners, which has about $300 billion in assets under management. The investment company has been involved in bringing nuclear companies to market and has investments in the nuclear energy supply chain.
He spoke Feb. 11 at the Nuclear Energy Institute's nuclear financing conference in New York.
One of the problems is the fragmented system of utilities and vendors in the US. Utilities with the skills needed to own and operate nuclear reactors have balance sheets that are too small to undertake new nuclear plant projects, he said.
"That has been the blockage" preventing construction on new nuclear plants from starting despite increasing power demand, Schwartz said. This has prevented deployment that "everybody agrees we need to do and yet is still moving very, very slowly," he added.
The solution may be the giant tech companies known as hyperscalers, which require massive computing capacity from large data centers, Schwartz said. "The hyperscalers are the ones who most need reliable energy ... they cannot allow their systems to shut down. If they don't step up, they are not going to get the power they need to run their business," he said.
In recent months, companies such as Amazon, Google and Microsoft have signed agreements for power from new or restarted nuclear plant capacity.
Schwartz said he believes the involvement of the tech companies will go beyond signing power purchase agreements at above-market rates for nuclear power. "They have the balance sheet and the capacity to put up capital and take the risk" involved in building nuclear plants, which often go over-budget, he said.
In addition, utilities appear to be ready to join in regional groups and collectively deploy eight to ten small modular reactors, sharing the costs and risks. "These kinds of conversations are going on every day, and I think they're going to gain momentum under the current administration," he said.
More companies are interested in investing in nuclear power, driven by leaps in demand for power to decarbonize the economy and support data centers and artificial intelligence, said Mari Korsnick, president and CEO of NEI, during the same conference.
In the next two years, NEI expects applications to be submitted to regulators for four grid-scale nuclear power plant sites as well as a handful of microreactors, she said. The group believes by that time five sites will have nuclear construction activity underway and two microreactors will be starting up, she added.
Regulatory improvements are being seen, Korsnick said, noting that a recent second license renewal for an Xcel nuclear plant was completed "well under the original estimate" for time and resources, "saving them millions of dollars."
The industry faces challenges, including to protect the tax credits for existing and new nuclear capacity passed by the administration of Joe Biden, Korsnick said. New US President Donald Trump has said he plans to roll back many climate-friendly policies enacted under Biden, and some in the nuclear industry have expressed concern that some measures could be unintentionally repealed by Trump despite his administration's generally pro-nuclear stance.
"Those tax credits .. are precious to nuclear and they're precious to send that signal that this is something that is important to do and helpful as we do a build-out" of nuclear capacity, she said.
The industry needs to start building in order to stimulate the expansion of the supply chain and begin series production on nuclear reactors that will eventually reduce costs, Korsnick said. "We just need to get building. The signal that the build sends to everyone [is] ... hey this is a sector that's ready. This is something you want to get into," she said.
Korsnick said she believes the new Trump administration will end up supporting advanced reactor demonstration programs and will continue to support the industry. Secretary Chris Wright, who recently stepped down from a position on the board of directors of advanced reactor company Oklo, has already indicated supporting the commercial nuclear industry is a priority for him, Korsnick said.
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