Axios Markets

August 09, 2024
Happy Friday! We have a special treat for you today from our friends at Axios Pro, with contributions from the Climate Deals and Energy Policy teams.
- We're diving into an industry seeing a surprising resurgence, in 775 words (3 minutes).
1 big thing: Nuclear power is having a moment
Investors are once again pouring money into the cash-hungry nuclear energy sector.
Why it matters: It's a stunning turnaround from 2017, when the construction of four nuclear reactors tipped one of America's oldest energy companies into bankruptcy.
The big picture: America's aging nuclear power fleet is still the single largest source of zero-emissions electricity in the U.S., but the country has added just three new reactors this century.
- Multibillion-dollar cost overruns and yearslong construction delays have made the prospect of building a traditional nuclear plant all but radioactive.
- Investors are therefore focusing on two unbuilt technologies. Small modular reactors (SMRs) use nuclear fission and are relatively easy to understand. Fusion reactors have many more unknowns.
By the numbers: Investment in advanced fission technologies, including SMRs, leaped more than tenfold to $3.9 billion in the first seven months of 2024 from $355 million in all of 2023.
- Moonshot fusion energy has seen U.S. funding jump 88% to $372 million — and Canadian funding is up too, including a $15 million investment from the Canadian government announced yesterday.
Stunning stat: Fusion startups now employ 4,000 workers, a 34% jump from 2023.
Reality check: Banks, which are often the largest and most critical sources of capital for infrastructure, remain leery of lending to new nuclear projects.
- The new funding comes mostly from private equity and venture capital firms, including existing nuclear power investors Vinod Khosla and Chris Sacca, as well as billionaire funders such as OpenAI CEO Sam Altman, Amazon founder Jeff Bezos, and Microsoft co-founder Bill Gates.
- Recent technology breakthroughs — as well as anticipated demand from power-hungry data centers — have stoked investor hopes that nuclear startups can reach markets within a fund's typical window of less than 10 years.
What's next: A commercial SMR or fusion reactor remains years from starting operation, and formidable obstacles remain.
- Inflation and high interest rates have sent construction costs spiraling.
- U.S. sanctions on Russia following the country's invasion of Ukraine have imperiled nuclear fuel supplies and equipment.
The bottom line: While the surge in equity funding reflects newfound optimism around the sector, it also reflects that next-generation nuclear power plants still aren't far enough along to attract cheaper, larger-scale debt financing.
2. The NuScale rollercoaster


NuScale Power Corp, an SMR company that went public via SPAC in 2022, was a prime beneficiary of 2024's surge in interest in the sector.
- Arguably the most prominent SMR developer in the U.S., NuScale saw its vaunted Utah project collapse as its pricetag swelled. Nevertheless, even after a pullback over the past month, it's trading close to its initial SPAC valuation of $10 per share.
3. How the AI boom has helped the nuclear industry
Nuclear power can generate vast amounts of energy without upending corporate emissions-reduction plans.
Why it matters: That's led investors to look anew at nuclear in the face of insatiable electricity demand from AI-focused data centers, with help from the Department of Energy.
The big picture: Wealthy and climate-conscious tech companies could end up a key part of advancing next-gen nuclear.
Where it stands: Microsoft and Amazon have struck partnerships for advanced nuclear projects this year.
- Microsoft said it would buy fusion power from Helion Energy in the world's first fusion purchase power agreement.
- Amazon acquired a nuclear-powered data center in Pennsylvania.
Follow the money: On the investment side, OpenAI CEO Sam Altman has funneled $350 million into fusion startup Helion and backed SMR company Oklo.
- Microsoft co-founder Bill Gates has plowed $1 billion into small reactor company TerraPower and says he's willing to put in another $1 billion.
4. Nuclear's political revival
Nuclear energy is experiencing a political revival that's resulted in Congress pumping billions into the next generation of reactors.
Why it matters: It's one low-carbon technology Democrats and Republicans agree on.
Zoom in: The Inflation Reduction Act allowed nuclear power to qualify for huge federal tax incentives traditionally reserved for wind and solar.
- The Department of Energy's nuclear research and commercialization programs consistently get big funding and bipartisan support in annual appropriations bills.
- Lawmakers this year also passed into law a package of regulatory changes aimed at making it easier to license advanced and small modular reactors.
Between the lines: Fuel is a challenge because the United States has brought in so much enriched uranium from Russia in recent years.
- President Biden recently signed a ban on Russian uranium imports into law, paired with $2.7 billion in funding for domestic fuel production.
- But there are hurdles to securing the consistent supply needed for advanced reactor designs.
The bottom line: Congress is supportive — for the time being. But more high-profile failures could turn policymakers off from an industry that already enjoys robust subsidies, even as they remain frozen on the issue of nuclear waste.
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This newsletter was edited by Felix Salmon and copy edited by Mickey Meece.
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