Nuclear power has returned to the spotlight in recent years as a key element of decarbonization and energy security policies. As also recognized by the United Nations Climate Conference in Dubai in 2023 (COP28), this technology can play a key role in decarbonization and already features in most scenarios for achieving zero emissions by 2050.
Projections by the International Atomic Energy Agency (IAEA) suggest that global installed capacity could grow from the current 372 GW to between 514 and 950 GW by 2050, with the most ambitious scenario envisaging 2.5 times the current capacity. This development would follow four main strands: extending the operational life of existing power plants; recommissioning plants that can be restored to operational status; building new large-scale plants; and developing smaller facilities, from small modular reactors (SMRs) to microreactors in industrial sites. More time is needed to assess the potential role of nuclear fusion, a technology that still seems decades away from being applied on an industrial scale.
China is the most significant example of this nuclear renaissance: of the reactors currently being built around the world, about half are located on Chinese territory. The Asian giant demonstrates the role that nuclear power can play in the decarbonization of a rapidly growing economy. Other emerging countries are also investing significantly. Turning to the West, the United States has made nuclear power a bipartisan priority: the Biden administration aimed to quadruple installed capacity, while the Trump presidency is trying to streamline the permit-issuing process, even to the point of weakening the regulator – with potentially damaging effects. Canada is the first OECD country to build a commercial SMR. And Japan is also resuming nuclear activity, which was suspended after Fukushima.
Europe is taking action too, with major projects in France, the United Kingdom, Poland and throughout the eastern European countries. According to the European Commission, conventional nuclear capacity in the EU is expected to rise from its current level of 98 GW to 109 GW by 2050, with an investment requirement of €241 billion, which includes €205 billion for new construction and €36 billion to extend the life of existing plants (all figures approximate). Italy recently progressed from its previous observer status to become a full member of the European Nuclear Alliance, and 46 Italian companies have joined the European Industrial Alliance on SMRs, an indicator of the business community’s interest in this technology.
The country has an opportunity to turn this interest and ambition into a long-term policy by improving the competitiveness of its industrial system; it can count, moreover, on skills, expertise and businesses that have remained at the forefront of this field notwithstanding the political choices of the past. A clear horizon and a clear energy policy are needed to bring Italy’s efforts to fruition. The optimal solution at 2040 could be a mix of 80% renewables and 20% new nuclear, which is also crucial to the needs of industry, an area where more flexible plants such as SMRs have a role to play.
Economic and technological challenges
Existing nuclear power plants in the United States and Europe are highly competitive, but in the construction of new facilities – with their numerous delays and significant cost overruns – nuclear risks losing that competitive edge. This does not depend on the technology – the large majority of reactors currently being built are of the conventional water-cooled type – or on labor costs. The main cause is that European countries and the United States stopped building nuclear power plants in the last decades of the 20th century, thus weakening the supply chain. The supply chain is more efficient and better coordinated in Asia, where commitment to nuclear power has remained stable and today allows for much shorter construction times.
Three key elements are needed to accelerate the construction of new power plants. The first is a regulatory framework that provides certainty, on a technology-neutral basis, for investors, industrial operators and the supply chain. The second is the need to speed up construction and permit-issuing processes; off-site manufacturing and a higher degree of modularization are essential to achieving this goal. The third element is to attract private capital: it is not realistic to finance the entire process from the public purse, especially in high-debt countries such as those in the West.
According to the IAEA, global investment in nuclear energy needs to grow from about $50-60 billion per year (in 2017-23) to about $125 billion per year if it is to reach the most ambitious nuclear capacity goal by 2050. Here, public funds can serve as a derisking tool to facilitate private investment and create leverage. It will be important to design financing that is tailored to the needs and specific features of each country. This includes new financial instruments such as green bonds, because nuclear power is viewed as sustainable in many jurisdictions, including the European Union.
In designing suitable financing plans, one critical aspect is cost assessment: not just levelized costs of electricity (LCOE) must be considered but also total system costs, including distribution, storage, and the need for balancing between different sources, all in an environment of increasing pressure – including geopolitical – on energy security.
Concerns about uranium availability seem marginal in this regard. Historically, fuel has been a strength for this sector in terms of availability and low costs. Over the last five years, geopolitical tensions and increased demand have, of course, changed this picture. Russia is a traditional supplier of fuel for power plants and is developing its supply chain, with projects in Bangladesh, Uzbekistan, Egypt and Belarus, thus binding these countries for decades in terms of assistance and supplies. However, the West too, in Europe and the United States, is creating new supply chains, including for enrichment, that will depend on whether the necessary investments actually materialize. This is an area where the two sides of the Atlantic could work together, given Europe’s experience in virtuous waste management and disposal.
In short, the shift towards a resumption of nuclear power production is already under way. This is true notwithstanding the risk that, in view of their complexity and lengthy implementation times, the new projects will fail to tap into the growing demand for energy for digital applications and electrification. Until 2030, in the principal Western markets (starting with the United States), the latter will largely be covered by gas. However, a more farsighted look at the coming medium-term decarbonization and security challenges is needed. Europe, once the main driver in this field, must resume its efforts and focus on a number of key enabling factors. First, we need a diversified supply chain and a circular economy for back-end nuclear operations. At the same time, training and skills development is a key factor: the revival of the sector could create hundreds of thousands of skilled, quality jobs throughout the continent. These steps must be accompanied by an institutional ecosystem that is fit for purpose and includes independent regulators and strong international cooperation. No less crucial is the involvement of public opinion, which is again looking more favorably on nuclear power: the goal is to build trust through clear communications and transparent decision-making processes, especially on sensitive issues such as waste management.