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Nuclear power is set to reach a new record in 2025, but costs, project overruns and financing must be addressed, according to IEA’s new report. Renewed momentum has the potential to open a new era for the segment as demand for electricity grows strongly, it said and estimated that investments would need to double by 2030 to USD 120 billion per year.
The International Energy Agency’s new report The Path to a New Era for Nuclear Energy shows the fresh impetus behind nuclear in the form of new policies, projects, investments and technological advances, such as small modular reactors (SMRs). IEA identified major challenges that it said would need to be addressed to build on the current momentum and enable a new era to take hold.
As the world’s second-largest source of low-emissions electricity, trailing only hydropower, nuclear power today accounts for just under 10% of the global electricity supply. There are almost 420 reactors online and 63 are under construction. Out of 416 GW installed, 288 GW is in advanced economies and China hosts 57 GW.
The increasing use of electricity – to power everything from industry and air conditioning to electric vehicles and data centers amid the rise of artificial intelligence – is accelerating power demand growth. It is set to rise six times as fast as overall energy consumption in the coming decades, based on today’s policy settings.
More than 70 GW is under construction
New generation capacity from a range of technologies will be needed to keep pace with the rapid demand growth, including ones that can provide firm and flexible output such as nuclear, the agency pointed out.
Birol: More than 40 countries around the world have plans to expand nuclear’s role in their energy systems
“It’s clear today that the strong comeback for nuclear energy that the IEA predicted several years ago is well underway, with nuclear set to generate a record level of electricity in 2025,” IEA’s Executive Director Fatih Birol said. In addition, more than 70 GW of new nuclear capacity is under construction globally, one of the highest levels in the last 30 years, and more than 40 countries around the world have plans to expand nuclear’s role in their energy systems, he noted.
“SMRs in particular offer exciting growth potential. However, governments and industry must still overcome some significant hurdles on the path to a new era for nuclear energy, starting with delivering new projects on time and on budget – but also in terms of financing and supply chains,” Birol stressed.
China building majority of nuclear energy capacity
The majority of nuclear power plants are located in advanced economies, but many were built decades ago. Meanwhile, the global map for nuclear is changing, as most of the capacity under construction is in China. The country is on course to overtake both the United States and Europe by 2030.
Of the 52 reactors that have started construction worldwide since 2017, 25 are of Chinese design and another 23 are of Russian design. Similarly, the report shows how the production and enrichment of uranium, the fuel that goes into nuclear reactors, are highly concentrated.
“Today, more than 99% of the enrichment capacity takes place in four supplier countries, with Russia accounting for 40% of global capacity, the single largest share. Highly concentrated markets for nuclear technologies, as well as for uranium production and enrichment, represent a risk factor for the future and underscore the need for greater diversity in supply chains,” Birol asserted.
SMRs drawing increasing interest
Innovations in nuclear technologies are helping to drive momentum behind new projects, the report finds. SMRs, smaller-scale nuclear power plants that are quicker to build with greater scope for cost reductions, are drawing increasing interest from the private sector.
SMRs will hinge on the industry’s ability to bring down costs by 2040 to a similar level to those of large-scale hydropower and offshore wind projects
With the right support, SMR installations could reach 80 GW by 2040, accounting for 10% of overall nuclear capacity globally, according to the forecast. However, the success of the technology and speed of adoption will hinge on the industry’s ability to bring down costs by 2040 to a similar level to those of large-scale hydropower and offshore wind projects, the report’s authors underscored.
Retirement of aging facilities to offset almost all currently forecasted additions
Based on today’s policy settings and market dynamics, the rise in SMRs and construction of large-scale reactors only just offset the effects of an aging fleet in advanced economies. It means capacity is slightly higher in 2050 than today. In the European Union, the share of nuclear power in the electricity mix peaked at 34% in the 1990s but has already fallen to 23% today and continues to fall steadily.
By contrast, in China, installed capacity more than triples by mid-century, while it doubles in other emerging and developing economies.
Most optimistic scenario envisages over 1 TW in total capacity by 2050
A new era for nuclear energy will require a lot of investment. The annual amount – encompassing both new plants and lifetime extensions of existing ones – has increased by almost 50% in the three years since 2020, exceeding USD 60 billion.
In a rapid growth scenario, annual investment would need to double to USD 120 billion already by 2030. That way nuclear capacity more than doubles by mid‑century. In the net zero emissions by 2050 scenario, annual investment exceeds USD 150 billion by 2030 and installed capacity surpasses 1 TW by mid-century.
Given the scale of the infrastructure investment required, the rollout of new nuclear projects cannot rely exclusively on public finances, IEA explained.
Notably, big names in the technology sector are signing power purchase agreements with developers to provide electricity for data centers and artificial intelligence.
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