Nuclear energy can help make the energy sector's journey away from unabated fossil fuels faster and more secure. Amid today’s global energy crisis, reducing reliance on imported fossil fuels has become the top energy security priority. No less important is the climate crisis: reaching net zero emissions of greenhouse gases by mid-century requires a rapid and complete decarbonisation of electricity generation and heat production. Nuclear energy, with its 413 gigawatts (GW) of capacity operating in 32 countries, contributes to both goals by avoiding 1.5 gigatonnes (Gt) of global emissions and 180 billion cubic metres (bcm) of global gas demand a year. While wind and solar PV are expected to lead the push to replace fossil fuels, they need to be complemented by dispatchable resources. As today’s second largest source of low emissions power after hydropower, and with its dispatchability and growth potential, nuclear – in countries where it is accepted – can help ensure secure, diverse low emissions electricity systems.  

Advanced economies have lost market leadership. Although advanced economies have nearly 70% of global nuclear capacity, investment has stalled and the latest projects have run far over budget and behind schedule. As a result, the project pipelines and preferred designs have shifted. Of the 31 reactors that began construction since the beginning of 2017, all but 4 are of Russian or Chinese design.

Restrictions on nuclear power remain in certain countries, driven by concerns about safety and waste. The 2011 accident at the Fukushima-Daiichi plant in Japan following a major earthquake undermined public trust in nuclear power, underscoring the need for robust, independent regulatory oversight. Accident risks are one of the main factors behind bans on nuclear power or policies to phase it out. While there is progress on disposing of high-level nuclear waste, with three countries having approved sites, gaining public and political acceptance has been challenging.

The policy landscape is changing, opening up opportunities for a nuclear comeback. More than 70 countries, covering three-quarters of energy-related greenhouse gas emissions, have pledged to cut their emissions to net zero. While renewables would provide the largest share of low emissions electricity and many countries either do not foresee the need or do not want a role for nuclear power, a growing number of countries have also announced plans to invest in nuclear. The United Kingdom, France, China, Poland and India have recently announced energy strategies that include substantial roles for nuclear power. The United States is investing in advanced reactor designs.

Energy security concerns and the recent surge in energy prices, notably in the wake of Russia’s invasion of Ukraine, have highlighted the value of a diverse mix of non-fossil and domestic energy sources. Belgium and Korea have recently scaled back plans to phase out existing nuclear plants. The UK Energy Security Strategy includes plans for eight new large reactors. Faster restarts of Japanese nuclear reactors that have received safety approvals could free up liquefied natural gas (LNG) cargoes desperately needed in Europe or other markets in Asia.

In the decade following the 1973 oil shock, construction started on almost 170 GW of nuclear power plants. These plants still represent 40% of today’s nuclear capacity. Nuclear additions in the last decade reached only 56 GW. With policy support and tight cost controls, today’s energy crisis could lead to a similar revival for nuclear energy.

The industry has to deliver projects on time and on budget to fulfil its role. This means completing nuclear projects in advanced economies at around USD 5 000/kW by 2030, compared with the reported capital costs of around USD 9 000/kW (excluding financing costs) for first-of-a kind projects. There are some proven methods to reduce costs including finalising designs before starting construction, sticking with the same design for subsequent units, and building multiple units at the same site. Stable regulatory frameworks throughout construction would also help avoid delays. 

An even larger role for nuclear power will require greater declines in construction costs. Hydropower, bioenergy and fossil fuel plants equipped with CCUS are the main alternative dispatchable low emissions sources to nuclear. Each one also faces challenges to expand. Hydropower sites and sustainable bioenergy supply are limited, while there are economic, political and technical obstacles to scaling up CCUS. Where there is potential to expand these alternatives and CCUS is commercially available, the construction costs of nuclear power would need to fall to USD 2 000‑3 000/kW (in 2020 dollars) to remain competitive. Depending on financing costs, this would yield a levelised cost of electricity for nuclear power of USD 40‑80/MWh, including decommissioning and waste disposal. If new projects were able to achieve these costs in more markets, an even larger role for nuclear would be available.

Using electricity from nuclear to produce hydrogen and heat presents new opportunities. The rapid expansion of low emissions hydrogen is a key pillar of the NZE, with related investment rising from near zero today to USD 80 billion per year to 2040. Under the NZE’s cost projections, hydrogen production via natural gas with CCUS or via electrolysis using renewables are the cheapest options. For nuclear to compete with these alternatives, investment costs would need to decrease to USD 1 000‑2 000/kW. The economics would be more favourable if the nuclear reactor is co-located with a hydrogen user, avoiding transportation costs. The NZE estimates surplus nuclear electricity could be used to produce an estimated 20 million tonnes of hydrogen in 2050. There are also possibilities to co-generate heat from nuclear plants to replace district heating and other high-temperature uses, though the potential scale of this market is limited and construction costs would need to fall to USD 2 000‑3 000/kW to make it competitive.

The challenge of net zero has stimulated a burst of development in small modular reactor technologies. In the NZE, half of the emissions reductions by 2050 come from technologies, including small modular reactors, that are not yet commercially viable. SMRs, generally defined as advanced nuclear reactors with a capacity of less than 300 MW, have strong political and institutional support, with substantial grants in the United States, and increased support in Canada, the United Kingdom and France. This support makes it possible to attract private investors, bringing new players and new supply chains to the nuclear industry. 

Being smaller can help SMRs fit in. Lower capital costs, inherent safety and waste management attributes and reduced project risks may improve social acceptance and attract private investment for research and development, demonstration and development. SMRs could also reuse the sites of retired fossil fuel power plants, taking advantage of existing transmission, cooling water and skilled workforces. Other opportunities include co-location with industry to provide electricity, heat and hydrogen.

Policy and regulatory reforms are needed to stimulate investment. The successful long-term deployment of SMRs hinges on strong support from policy makers and regulators to leverage private sector investment. Adapting and streamlining licensing and regulatory frameworks to take SMR attributes into account is key. International harmonisation of licensing and definitions are essential to developing a global market. Securing private financing will require a robust and technology-neutral policy framework, including in the area of taxonomies and environmental, social and governance that will have a growing influence on financial flows.

Decisions are needed now for SMRs to play a meaningful part in energy transitions. While only a small number of units are likely to start operating this decade, with recent momentum SMRs could start playing a significant role in energy transitions in the 2030s, provided that regulatory and investment decisions are made now, and commercial viability is demonstrated. This is true both for small evolutionary reactors that could achieve economic competitiveness more readily, but also for the advanced reactor models.