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Financing Timelines

Financing—whether looking for long-term revenue or facilitating ways for investors to recover costs during construction—has been a focal point for capital-intensive nuclear plants for many years. Julie Kozeracki of the Department of Energy’s (DOE’s) Loan Programs Office moderated a panel discussion on efforts to improve options for sustained financial backing that will alleviate risks of abandonments, regulatory complications, and public perception. Introducing the panel, Kozeracki noted that her office provides large-scale debt financing for high-impact energy projects, such as Georgia Power’s Vogtle 3 and 4 plants and the Palisades Power Plant in Michigan, that would otherwise have struggled to find funding. The discussion examined types of contracts shaping investment strategies along with mechanisms for attracting diverse investors. The panelists were Aaron Abramovitz, Georgia Power; Allen Otto, Guggenheim Securities; Ryan Nielson, Citi; Stephen Comello, Energy Futures Initiative Foundation; and James Krellenstein, Alva Energy.

OPENING REMARKS

Opening the session, Abramovitz said that building Georgia Power’s Vogtle 3 and 4 led to significant construction efficiencies, a more mature supply chain, and a more experienced workforce. However, the high costs (even with generous loan financing), long timelines, and overall challenges of these complex projects make it unlikely that the utility will build additional large reactors in the near term, although it does have other generation and capacity projects, including gas generation and

battery storage systems in the works. Broadly speaking, Abramovitz said that large-scale nuclear projects, whether they are small modular reactors (SMRs) or light water reactors (LWRs), are still seen as too risky to undertake without a safety net of financial incentives. If stakeholders agree that increasing nuclear energy is key to energy security and decarbonization, he suggested that the federal government, perhaps with industry partners, needs to create those safety nets to enable the industry to progress from first-of-a-kind designs to scalable construction.

In addition to federally backed financial incentives, Abramovitz said that it is important for utilities to be able to share the financial risks of building a new service for their customers, especially one that will take years, cost billions, and ultimately impact energy affordability for a utility’s customers. Regulated utilities are not incentivized to build generational assets like nuclear plants because the high degree of financial risk along with limited or non-guaranteed rate of return makes it hard to recoup expenses, which he said hurts owners, investors, and customers. Because private companies operate differently and are not subject to those regulations, they may have more of an appetite for financial risks. On the other hand, he added that utilities are more accustomed to making long-term decisions and operating within regulations than technology companies. The incredibly long lifespan of a nuclear plant is an asset, but also makes it challenging to compare the future economic value of nuclear energy to alternatives, especially given the volatility of markets, inflation, and fuel and labor costs.

Otto highlighted additional reasons why nuclear projects have failed to attract typical energy investors, including their relatively high risks in comparison with conventional generation and their particularly long timetables to deploy. Partnerships and financial incentives will be critical to make the economics work, he said, but even then, the timeline to deployment is longer than seen in typical energy investments and the return profile for initial projects may not be overwhelmingly attractive, either as a regulated utility or in a competitive market. While lessons have been learned from previous projects, and momentum is clearly building, Otto said that there is a need for more resources, such as federally backed cost overrun insurance, to address the financial risks. He also expressed his agreement with Kozeracki, who stated that cost overruns are different from cost underestimations, which happen frequently in megascale or first-of-a-kind projects.¹

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¹ B. Flyvbjerg and D. Gardner, 2023, How Big Things Get Done: The Surprising Factors That Determine the Fate of Every Project, from Home Renovations to Space Exploration and Everything in Between, Currency.

Nielson said that there are several potential pathways toward financing large nuclear power projects. For example, the DOE Loan Programs Office plays an important role by offering loan guarantees for large nuclear energy projects that are commercially competitive, acting as a bridge to bankability. In another example, he noted that Export Control Agency financing is being pursued in support of many European refurbishment and construction projects, which may provide a template for North American projects to follow. Further, to help manage the schedule and cost uncertainties associated with new nuclear builds, and thereby reduce the financing risk to debt and equity investors, projects can be structured using an integrated project development team. Distinct from a traditional engineering, procurement, and construction (EPC) fixed-price delivery (“wrapped”) construct, the integrated project development performance and delivery guarantees are provided separately by the various project participants based on their scope of work to ensure members who take on more risk see more returns, while incentivizing cost controls. In addition, he suggested the creation of a federal program to address cost overruns and tail risks (the chance of loss occurring due to a rare event), which are difficult for even the largest and most creditworthy potential power plant owners to absorb. While it is not quite the same as risk insurance, he noted that the investment tax credit created by the Inflation Reduction Act (IRA) of 2022 provides extra margin or contingency when underwriting power plant investment. He said that the United States can make nuclear investments more appealing by providing these sorts of federally backed loan or incentive programs that protect against investment loss while ensuring competitive investment returns, a model that has worked in other countries.

Building on these points, Comello agreed that financial incentives like the IRA investment tax credit and the DOE Loan Programs Office are essential to making nuclear projects more cost-effective and attractive as investments. However, while the Vogtle plant experiences have yielded valuable data and learnings, he said that capital markets are not yet confident in the viability of building more nuclear plants, especially when it comes to building a single reactor or a first-of-a-kind design. To move forward, he said that investors and stakeholders will need to rally around one design and suggested building a risk-sharing consortium that could include utilities, private equity investors, states, the federal government, and end users that can pool resources, leverage financial incentives, and share the risks and gains of building multiple reactors. Crucially, investing in project development—focusing on design completion and construction details—can also lower costs and reduce the chance of unanticipated cost overruns, he added.

Krellenstein emphasized that while progress is being made, there remains a long road ahead and sustained investment will be needed to

achieve broad nuclear energy deployment. New nuclear programs are gaining in appeal, thanks to increased load growth and users willing to pay a premium for firm, low-carbon power. However, he stressed that investors need the DOE Loan Programs Office and the IRA’s investment tax credits, noting that estimates have suggested that losing those programs would nearly double the levelized costs of energy. “The number one priority for all of us who are pro-nuclear in this industry is to make clear to the current administration, who is supportive of nuclear, that these programs are absolutely non-negotiable,” Krellenstein said.

Krellenstein also highlighted the need for data and realistic expectations when it comes to weighing the costs and benefits of nuclear builds, which can also inform considerations around the trade-offs between SMRs and large reactors. Even assuming aggressive cost reductions from first-of-a-kind to nth-of-a-kind projects, SMRs typically cannot offset the loss of economies of scale (or multiples), even by the tenth build. As a result, they likely will still cost substantially more on a capacity-adjusted basis than large LWRs.² He stressed the importance of reflecting this reality in policies and financial engineering solutions to help build nuclear reactors. The capacity factor of nuclear plants is another aspect that can be misunderstood. In addition to being carbon-free, part of the appeal of nuclear energy is its high capacity factor—currently averaging above 92 percent in the United States’ current operating fleet.³ Unfortunately, that number cannot be assumed for non-LWR technologies like high-temperature gas reactors or sodium-cooled reactors. While first-of-a-kind advanced large LWR technologies—like Westinghouse’s Advanced Passive 1000 (AP1000) technology or GE-Hitachi’s Advanced Boiling Water Reactor—have accomplished extremely high capacity factors in their first years of operation, the same cannot be assumed of non-LWR technology.⁴ For example, the largest non-LWR commercial plant built in the United States, the Fort St. Vrain Nuclear Power Plant in Colorado, a high-temperature gas reactor, had an average capacity factor of less than 16 percent over 14 years of operation.⁵

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² W.R. Stewart and K. Shirvan, 2022, “Capital Cost Estimation for Advanced Nuclear Power Plants,” Renewable and Sustainable Energy Reviews 155:111880, https://doi.org/10.1016/j.rser.2021.111880.

³ U.S. Energy Information Administration, “Table 6.07.B. Capacity Factors for Utility Scale Generators Primarily Using Non-Fossil Fuels,” Electric Power Monthly, https://www.eia.gov/electricity/monthly/epm_table_grapher.php?t=table_6_07_b, accessed April 14, 2025.

⁴ See, e.g., International Atomic Energy Agency (IAEA), “SANMEN-1 Operational,” https://pris.iaea.org/pris/CountryStatistics/ReactorDetails.aspx?current=879, accessed April 14, 2025.

⁵ See IAEA, “FORT ST. VRAIN Permanent Shutdown,” https://pris.iaea.org/pris/countrystatistics/reactordetails.aspx?current=623, accessed April 14, 2025.

PANEL DISCUSSION

Considerations Around Reactor Designs

Kozeracki asked panelists to discuss the differences in reactor designs in the context of financing. Nielson replied that one major difference is where and how the reactors are intended to be used. In his view, SMRs are more attractive for new markets and non-grid applications, while larger reactors are better suited to replacing large coal or natural gas plants. He added that the designs’ capital needs are also very different. Small reactor designs may require less outside financing or have more pathways available, although he noted that the term “small” is relative, as even a small nuclear reactor can still be a very large project. Krellenstein noted that SMRs seem more likely to encounter problems such as cost overruns and underestimations, especially as their designs go from conceptual designs to detailed designs ready for construction.

Otto agreed that SMRs and traditional large-scale nuclear designs have different end uses and markets. He added that they also may have very different financing structures, because of relative differences in total project cost and development timelines. To attract outside capital, it is important to build an investment case for them. Abramovitz agreed that demonstrating prior success is the best way to obtain more financing and said that the AP1000 is the only design in the United States that can do so. Switching to a new design would only add more risk. Kozeracki also agreed, noting that the AP1000 holds greater appeal, from a financing perspective, than the 50-plus other SMR and LWR designs for this reason.

Learning Lessons and Sharing Risks

Abramovitz stated that $10 billion is too large an investment to expect any end users, even large utilities, to make alone. Comello agreed, noting that nuclear reactors are no longer built by one entity—ownership, responsibilities, and risks can be shared by different utilities across multiple states. He suggested that other stakeholders should similarly unite and explore partial ownership deals to share risks and minimize cost exposure, whatever the reactor design is. Krellenstein agreed, stating that while developing such partnerships is challenging, they have been instrumental in the success of new nuclear projects in the United States and abroad.

When asked by Kozeracki how large technology companies can participate in advancing nuclear energy deployment, Otto answered that many technology companies are already supporting nuclear power to achieve firm, low-carbon energy. Well-resourced companies are launching

partnerships to share the risks, but they need a compelling business case to do so. Financing nuclear projects is very different from signing a power purchase agreement for a traditional renewables project—it is a decades-long commitment as these customers wait for a nuclear project to develop.

Hunter Dare, Columbia University, asked how feasible it would be to create risk-sharing consortia to launch projects. Nielson replied that collaboration has already begun, but private financing for utilities is new territory for banks and investors, which is why they need the DOE Loan Programs Office’s mirroring of banks’ underwriting standards. Once a consortium has demonstrated that it can share risks and show deliverables within a given timeframe, outside investors will be much more interested. Krellenstein agreed, adding that there are groups investigating public–private financing options and negotiating for new AP1000s based on the strengths and successes of other large, capital-intensive energy projects, such as offshore wind. Comello also agreed and noted that it is important for project sponsors such as utilities and end customers like hyperscalers to act transparently to avoid accusations of collusion or antitrust violations.

Robert Ichord, Atlantic Council, pointed out that a strategic international approach is also needed in order for the United States to compete with China and Russia. Most countries will need international support to build $10 billion reactors instead of solar panels, especially given the unproven cost-effectiveness of nuclear energy. He said that clear investment benefits, supportive government policies, and national security concerns should guide the international nuclear transition, which is critical to lowering energy prices and advancing decarbonization goals.

Asked by a participant why investors would support nuclear projects without performance guarantees, Abramovitz replied that Vogtle was remarkable for both its challenges and its successes. Initially there were price guarantees, but the cost overruns outgrew them. While disappointing, this taught the industry the importance of having an actor—a technology company, an investor, or a utility—that is fully committed to a project despite the risks, a venture few are willing to take on. Investors need proof-of-concept, which first-of-a-kind projects cannot offer; proven designs or existing infrastructure optimizations are easier to guarantee and can bring some wins. Most large, multiyear projects are subject to unpredictable administration changes and natural disasters, Abramovitz added, but it is possible to apply lessons learned along the way to improve future efforts. Krellenstein added that part of the challenges faced in the Vogtle projects stemmed from launching construction before the design was complete. Despite the challenges, however, the plants are a success, powering homes and businesses across Georgia, and building more such plants will be much easier in the future. Comello added that Vogtle

complications also stemmed from the many idiosyncratic interruptions, cost increases, and delays caused by the COVID-19 pandemic.

Krellenstein, in reply to a question from the audience, also noted that China has been successful integrating lessons learned and has built standardized reactors on a dramatically shortened construction timeline. He pointed out that China’s main advantage in this space is its centralized economy, which makes project financing and decision making easier than in the United States.

Moving Forward

Kozeracki asked the panelists how to break the apparent “stalemate” between nuclear energy demand and financing needs. Abramovitz said that progress is being made, but he posited that momentum will wane if demand does not translate into orders. Otto and Nielson agreed, with Nielson stating that several recent wins and signals show progress.

Comello also said that the stalemate is ending. He pointed to multiple developments that are creating the momentum needed for nuclear projects to move forward: credible entities are narrowing the design portfolio, states and localities are mobilizing to create new financial incentives and support mechanisms that complement the DOE Loan Programs Office and investment tax credits, and hyperscalers are setting ambitious goals that they need nuclear energy to meet.

Krellenstein expressed agreement but added that more progress is still needed. He pointed out that until quite recently, nuclear plants were only being decommissioned. He said the entire ecosystem—the workforce, supply chain, and EPC partners—is currently in flux, but he is optimistic about the future. “We have really turned the entire industry around 180 degrees, and I don’t think it should be shocking that there are some growing pains that are happening right now,” he noted.

Jeffrey Semancik, Connecticut Department of Energy and Environmental Protection, asked whether changes in tariffs and offshore supply chains could complicate this progress. Abramovitz stated that new tariffs or regulations are unavoidable during long-term construction projects and signal opportunities for more onshore options. However, because a mature domestic supply chain would take years to develop, a full economic picture of a plant’s value far into the future is challenging to determine. In the meantime, Nielson suggested that importing components creates opportunities for export credit agencies that can be used to finance new reactors.

Otto replied that the unpredictable future of nuclear energy undermines investor confidence in building the fleet needed to lower costs and risks, for both investors and customers. However, even for projects with

very long timetables, benefits and returns can be generated if everyone works together, embraces knowns and unknowns, leverages financial incentives, and pushes forward to complete projects.

Matt Bowen, Columbia University, asked panelists if a federal backstop of taxpayer bailouts, in the event of dramatic cost overruns, was needed. Abramovitz replied that it may be, and while this should not be unlimited, it should be large enough to enable a project to continue in the face of unexpected challenges, achieve design maturity, and balance the high costs and risks the investors and utilities face.