Nuclear Revival Boosts Infrastructure Investment

TL/DR -

Investment in nuclear energy is on the rise, driven by government support, policy changes, and societal pressure for clean energy sources. However, expansion is constrained by inadequate nuclear infrastructure, with estimates suggesting $21 trillion in power grid infrastructure investment is needed globally to reach net zero. Private investment is expected to increase, with areas of focus including early-stage technology investment in new nuclear technologies, commercial project financing, and infrastructure support like mining and transportation systems for nuclear resources.

Nuclear Energy Investment on the Rise

Nuclear energy investment is surging, fueled by government incentives, policy shifts, and societal pressures. The Inflation Reduction Act and other infrastructure bills are directing billions towards clean energy investments, including nuclear. In April, the House passed the Atomic Energy Advancement Act 365-to-36, signifying a broader acceptance of nuclear power as a clean energy source. However, inadequate nuclear infrastructure presents a challenge to meeting this growing demand.

The Grid Bottleneck

"The grid is the main obstacle for energy expansion," states Jason Cheng, CEO of energy-focused private equity firm Kerogen Capital. BloombergNEF estimated that $21 trillion in power grid infrastructure investment is needed for the shift to clean energy required to achieve global net zero.

Private Investment in Nuclear Power

As governments invest more, private investment in nuclear power and clean energy infrastructure is expected to rise. S&P Global Market Intelligence anticipates an increase in private equity investment in clean energy, including nuclear, in 2024.

Nuclear Tailwinds

Government support is a key driver of investment in nuclear energy and necessary infrastructure upgrades. The FY2025 White House budget is requesting approximately $1.6 billion in funding for the Department of Energy’s Office of Nuclear Energy, demonstrating that nuclear remains a high priority.

Investors Drawn to Nuclear Power

Nuclear power is increasingly seen as a green energy source to support decarbonization goals. "Nuclear has become a growth industry as governments recognize that green baseload is the future of energy," Cheng says. Public support for environmental goals, such as the Net Zero 2050, is growing, with a majority of Americans favoring carbon neutrality by 2050.

Attracting Nuclear Investors

Nuclear support services companies are increasingly attracting investors. These companies provide technical research, engineering consulting services, and regulatory consulting services. One example is Bernhard Capital-backed Allied Powers’ acquisition of Dominion Engineering, a provider of services to the nuclear power sector, in late 2023.

Future Attraction for Investors

With high interest and investment in nuclear energy, opportunities in the necessary supporting infrastructure should follow. One area of potential is the mining infrastructure and projects in the U.S., as historically low uranium prices have begun to rise. Another is the transportation framework needed to move nuclear resources around the country. "The most common reason for delayed development timelines in new energy projects is the wait for grid connectivity," Cheng notes.

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