Investments in nuclear energy are critical for meeting decarbonization commitments and achieving ESG goals. Find out why public and private leaders are investing in nuclear energy.
Advanced nuclear has the ability to be safe, reliable, and—we at Guggenheim believe—it's going to be amongst the most affordable forms of power generation.
Nuclear’s Central Role in Climate Finance
Private companies continue to invest billions in advanced nuclear energy technologies. The Nuclear Regulatory Commission certified the first SMR in January 2023 and several additional designs are currently being discussed. Countries around the world like Canada and Poland have announced agreements to deploy new nuclear technology, and demand for nuclear is bigger than ever.
An NEI survey of its 19 utility members found the possibility of nearly 330 new SMRs planned to be deployed over the next 25 years. A recent Vibrant Clean Energy (VCE) study found that pairing nuclear with wind and solar is the most cost-effective means to decarbonize electricity generation. The 2022 IPCC Sixth Assessment Report found that holding a global average temperature increase to 1.5°C requires a doubling of global nuclear energy generation by 2050. The IPCC report also stated that global investments in nuclear energy generation are projected to average well over $100 billion per year through mid-century.
The Department of Energy also found this increase in demand. As part of the DOE’s new Pathways to Commercial Liftoff report, the department found that U.S. domestic nuclear capacity has the potential to scale from nearly 100 gigawatts in 2023 to approximately 300 gigawatts by 2050, driven by the deployment of advanced nuclear technologies.
The new era of advanced nuclear has arrived and market opportunities are ever-expanding.
88 percent of wealth managers reported recently investing in nuclear energy or uranium-focused funds.
Nuclear's an Investible ESG Asset
A 2022 study from The Center for ESG and Sustainability (CESG) found that the U.S. nuclear energy industry is a strong performer for ESG investing. CESG is a collaborative effort that features a partnership with the International Research Institute for Climate & Society at Columbia University. The CESG report concluded that nuclear is an investible ESG asset and predicted that, if nuclear is recognized in ESG frameworks, it could fulfill its promise of helping to achieve economy-wide, net-zero decarbonization.
Here are just a few ways in which nuclear energy meets ESG investing definitions:
- Environmental: In addition to its unmatched carbon-free output, nuclear energy uses less critical minerals, land, and water than other energy sources.
- Social: Nuclear’s resiliency during extreme weather events, ability to support local economies with high-paying jobs, and positive engagement with nearby communities makes it a solid performer against social factors.
- Governance: The nuclear industry meets governance considerations via its dedication to strict safety standards and a diverse and inclusive workforce.
We’ve seen a big momentum shift in the financial community toward nuclear, and that’s due to a realization that we need nuclear power in order to meet our simultaneous climate and reliability goals.
Strong Signals for Nuclear Investment
Interest Across the Finance Community: Enthusiasm for nuclear energy has been growing, with announcements from Goldman Sachs, Guggenheim, Bank of America, Citibank, JP Morgan, Bloomberg New Energy Finance, and Financial Times. Brookfield Asset Management published a white paper in 2022, recognizing a “new dawn for nuclear power,” and a leading European ETF provider reported an eagerness amongst investors for nuclear fund strategies.
Surges in Private Investment: A trend of increasing private investments in nuclear is taking hold. In 2022, NuScale Power completed their merger with Spring Valley Acquisition Corp. to become the world’s first publicly traded SMR technology company. U.S. nuclear power company, Westinghouse Electric, was sold to Brookfield Renewable Partners and Cameco in a $7.9 billion deal. TerraPower announced a $750 million fundraise, rounding out the top 10 venture capital deals made in the third quarter of 2022, and SMR developer X-energy went public in a $2 billion deal. Recently, Oklo also announced their intention to go public.
Nuclear power is the only carbon-free energy source we have that can deliver power day and night throughout any season, almost anywhere on earth. And it’s been proven to work at a large scale.
Unprecedented Federal Investment: Nuclear is at the center of what President Biden called “the biggest step forward on climate ever:” the Inflation Reduction Act. With the infrastructure package, Production Tax Credit, Advanced Energy Project Credit, and other programs, nuclear continues to draw bipartisan support at the federal and state levels.
Deployment Progress Underway: The U.S. certified its first small modular reactor in 2023 and companies are making strong progress in developing advanced reactors. Public-private cost-sharing partnerships such as the Advanced Reactor Demonstration Program (ARDP) are catalyzing innovation, and utility corporations are including power from nuclear, including SMRs, in their planning.
International Activity: As governments continue to codify their sustainable taxonomies, they're recognizing nuclear energy's strong performance. In 2022, the EU voted to formally include nuclear in its EU Taxonomy; South Korea included nuclear in a draft of its K-Taxonomy; and Canada's Ontario Power Generation (OPG) also added nuclear to its green bond framework. In 2023, the UK classified nuclear as environmentally sustainable. Partnerships between U.S. companies and international customers are underway. According to market research firm UxC, U.S. nuclear exports could be worth $1.9 trillion over the next 30 years.
I've never seen a credible energy transition strategy that does not include nuclear.
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Related Resources
- “What will it take for nuclear power to meet the climate challenge?” McKinsey & Company
- “The Case for Nuclear as a Sustainable Investment” The Center for ESG and Sustainability (CESG)
- People, Planet, Profit
- More Voices Saying More Nuclear
- As ESG commitments grow in the business community, is this the moment for a climate solution?
- Through the eyes of a CSO, what does it mean for a company to be sustainable?
- Energy Studies and Models Show Advanced Nuclear as the Backbone of Our Carbon-Free Future
- The RIC Report: The Nuclear Necessity
- Taking the Investment Pulse: Q4 2023
- Global Outlook for Clean Nuclear Energy: Trending Up