Unlocking the Future: Financing the Nuclear Energy Transition

The financing of new nuclear power plants is a critical challenge facing the energy sector today. Despite growing interest from NEA member countries in leveraging nuclear power to drive the energy transition, a range of technical, economic, institutional, and logistical hurdles must be overcome. Securing sufficient financing is one of the key obstacles that must be addressed.

Powering the Path to Net Zero: Financing the Nuclear Energy Revolution

Convening Experts to Tackle the Financing Conundrum

To address this pressing issue, the Nuclear Energy Agency (NEA) recently organized a workshop titled "Financing Nuclear New Build Today." This event brought together leading experts in nuclear energy, electricity market design, and infrastructure financing, along with national-level policymakers in the energy sector. The workshop, hosted by the Ministry of Industry and Trade of Czechia in Prague, aimed to compare various financing models that have been adopted or discussed, with a focus on understanding the allocation of construction and price risks.

Unlocking the Path to Net Zero: The Role of Nuclear Energy

In his opening remarks, NEA Director-General William D. Magwood, IV emphasized the critical role that nuclear power will play in achieving net-zero carbon emissions by 2050. He highlighted that the development of significant new nuclear power generation capacity in the coming years and decades will be essential to this goal.

Bridging the Financing Gap: Innovative Approaches Explored

The workshop delved into the state of nuclear finance today, examining various financing models for nuclear new build, the differences between financing large-scale reactors and small modular reactors (SMRs), and the needs of private and public investors to secure financing at low costs of capital. Participants from a diverse range of public and private organizations, including Barclays, Bpifrance, EDF Group, the European Commission, the European Investment Bank, and various government ministries, shared their insights and experiences.

Czechia's Commitment to Nuclear Energy: A Case Study

Tomáš Ehler, Deputy Director General for Energy and Nuclear Sources at the Ministry of Industry and Trade of Czechia, emphasized the importance of financing in nuclear new build for his country. He highlighted the recently approved support scheme for nuclear new-build in Czechia, which includes a state loan, a purchase contract, and protection against political and legal changes, based on an intergenerational sharing of costs and benefits.

Navigating the Financing Landscape: Key Considerations

The workshop's closing session, moderated by Senior Economic Advisor at the NEA, Jan Horst Keppler, underscored several key outcomes:1. A dynamic approach to financing Generation III nuclear plants is required, with the shares of public and private actors changing over the project lifecycle as pre-agreed milestones are met.2. Both electricity market risk and construction risk of new nuclear power plants will need to be borne by consumers and the government.3. The division of labor between private and public actors for SMRs must be defined more comprehensively, as private investors' willingness to engage in deployment may require public support.4. For Generation III new build, public and private investors will need to be more involved in project management to contain the risks of budget overruns.

The Path Forward: Securing Financing for Nuclear New Build

In his concluding remarks, Director-General Magwood shared what he sees as the five "key ingredients" crucial to ensuring sufficient financial support for nuclear new build:1. Social and political support2. A system-wide approach3. Stabilization of designs4. Lowering overnight costs5. Minimizing financing costsThe upcoming Roadmaps to New Nuclear 2024 conference will continue to explore the key challenge of financing for new nuclear and support NEA member countries in their endeavor to implement nuclear energy policies that will help provide energy security while mitigating climate change.