Nuclear energy: a resurgent industry facing old challenges

This week, the UK government gave the green light for the construction of Sizewell C on the Suffolk coast. The cost of the nuclear power station has nearly doubled since it was first proposed. When French group EDF initially put forward plans for the project in 2012, the estimated cost was around £20bn. As of the Final Investment Decision this week, the projected cost has risen to £38bn.

This sharp increase is attributed to inflation, updated risk assessments, and the adoption of the Regulated Asset Base (RAB) funding model, which spreads costs between taxpayers, consumers, and private investors. Despite the leap in costs, the UK government argues that Sizewell C will still be 20% cheaper than Hinkley Point C – and will ultimately deliver £2bn in annual savings to the electricity system once operational.

The increasing adoption of nuclear power is a global initiative, endorsed by more than 40 countries at the United Nations’ COP28 climate conference which aims to triple nuclear capacity by 2050.

A strategic pillar of energy strategy

According to the International Energy Agency (IEA), more than 410 nuclear reactors currently operate in over 30 countries. They supply 9% of global electricity, and nuclear is the second-largest source of low-emissions power after hydropower. The United States maintains the largest fleet, while China has rapidly expanded its capacity and now holds the third-largest operational fleet globally. In Japan this week, power group
Kansai Electric Power made the first steps in the construction of the country’s first new nuclear reactor since the Fukushima disaster in 2011.

Nuclear energy is increasingly seen as a strategic pillar in national energy plans. The UK government’s current energy strategy is a sweeping plan aimed at achieving net-zero emissions and enhancing energy security by reducing the country’s reliance on imported fossil fuels. The UK aims for nuclear to provide a quarter of its electricity by 2050.

Sizewell C is the first UK state-backed nuclear plant in more than three decades, alongside investments in small modular reactors, fusion energy, and carbon capture technologies. It will be a 3.2-gigawatt facility capable of powering six million homes for at least 60 years. It is expected to deliver £2bn in annual electricity system savings and support 10,000 jobs at peak construction, with 70% of its value awarded to British businesses. The plant’s inclusion reflects the government’s ambition to build clean, homegrown energy infrastructure that reduces exposure to volatile global markets.

The project is being financed through a mix of public and private capital under the RAB model, a first for UK nuclear energy. The UK government is the largest shareholder, holding a 44.9% stake, making British taxpayers co-owners of the plant. Other key investors include Canadian pension fund La Caisse de dépôt et placement du Québec (20%), Centrica (15%), Amber Infrastructure (7.6%), and EDF (12.5%), which is also leading the construction.

Construction is being delivered by a network of more than 200 UK-based companies under the Sizewell C Consortium, which includes engineering firms, manufacturers, and service providers from across the country. It is projected to support 70,000 jobs nationwide and inject billions into regional economies, particularly in Suffolk, the North of England, and Wales.

However, the nuclear resurgence is not without controversy. Critics argue that large-scale reactors are plagued by delays and cost overruns, particularly in advanced economies. Concerns persist over radioactive waste management and safety risks. Others point to the rapid rise of renewables – especially solar and wind paired with storage – as more agile and cost-effective alternatives.

Small Modular Reactors poised to transform nuclear energy

Small Modular Reactors (SMRs) are emerging as a transformative force in the global energy landscape, offering a compelling alternative to traditional nuclear power plants. Unlike their large-scale counterparts, SMRs are designed for factory fabrication and modular deployment, significantly reducing construction time and upfront capital costs. Their compact size and passive safety systems make them ideal for remote locations, smaller grids, and industrial applications where conventional reactors are impractical.

SMRs also offer greater siting flexibility, enhanced safety through simplified designs, and the ability to scale output by adding modules as demand grows. In the UK, the government has selected Rolls-Royce to lead the development of the country’s first fleet of SMRs, with a planned launch around 2035. Each unit will generate 470 megawatts, and a trio of reactors is expected to supply 1.5 gigawatts to the grid – roughly half the output of the Sizewell C plant but at a fraction of the cost and build time.

Globally, more than 70 SMR designs are under development, with countries including the US, Canada, and Czechia racing to deploy them as part of their net-zero strategies. While regulatory hurdles and licensing remain challenges, SMRs are widely seen as a key pillar in the next generation of clean, secure, and flexible energy systems.

Benefits of nuclear power

Nuclear power offers a complex mix of benefits and drawbacks that continue to shape its role in global and national energy strategies:

• Low carbon emissions: Nuclear energy produces minimal greenhouse gases during operation, making it a key tool in combating climate change.
• Reliable baseload power: Unlike intermittent renewables such as wind and solar, nuclear provides consistent electricity 24/7, supporting grid stability.
• High energy density: A small amount of nuclear fuel generates a large amount of energy, reducing the need for vast land use.
• Energy security: Domestic nuclear generation reduces reliance on imported fossil fuels, enhancing national energy independence.
• Long-term cost efficiency: Though expensive upfront, nuclear plants can operate for over 60 years, offering long-term returns.

Disadvantages of Nuclear Power

• High capital costs: Building nuclear plants requires massive investment and long lead times, often plagued by delays and budget overruns.
• Radioactive waste: Managing spent fuel and other radioactive materials remains a major environmental and political challenge.
• Safety risks: Accidents such as Fukushima and Chernobyl have left lasting concerns about safety, especially in densely populated areas.
• Decommissioning costs: Shutting down and dismantling old reactors is complex and costly, with long-term environmental responsibilities.
• Public opposition: Nuclear projects often face resistance due to safety fears, waste concerns, and historical distrust, especially stemming from the nuclear arms race era.

The UK’s strategy – blending nuclear, renewables, and industrial support schemes – implies a pragmatic approach to decarbonisation and economic resilience. For example, the British Industrial Competitiveness Scheme aims to cut electricity costs by up to £40 per megawatt-hour for more than 7,000 electricity-intensive businesses from 2027.

Investment opportunities in the nuclear power industry can be found across the value chain. These include uranium miners and enrichers, construction and engineering companies, businesses that build reactors and related equipment and companies active in managing nuclear waste.

Despite the many challenges, nuclear energy remains a key component of the global energy transition. Its ability to provide regular, stable, low-carbon power makes it uniquely valuable in balancing grids dominated by intermittent renewables. It can take up the slack when the wind does not blow or the sun does not shine. Whether it can overcome economic, political, and public trust hurdles will determine its long-term role in the energy mix. However, for now, its low emissions and energy security benefits are driving a cautious renaissance for the industry.