Time to Dive In or Stay on the Sidelines? Navigating Nuclear Market Entry

Prospective suppliers to the nuclear power industry — from reactor OEMs and fuel suppliers to EPCs — are considering if and when commercial nuclear could be a growth platform. After years of natural gas price competition and Fukushima-driven safety concerns, the last year has brought a flurry of positive supply and demand signposts. But are they enough to drive the industry forward, and what risks would a supplier face by investing now?

Looking back further, the seeds for some of these stimulants were planted in the wake of the last round of nuclear enthusiasm, starting in 2005 and commonly referred to as the Nuclear Renaissance. These include the growth in new reactor product development by both legacy incumbents (e.g. GE Vernova Hitachi) and first-time reactor developers (e.g. Holtec and NuScale) to the 2022 Inflation Reduction Act's (IRA) new Clean Electricity production and investment tax credits (PTC and ITC). While nuclear power has benefited from bipartisan support in the U.S., Trump 2.0 has injected substantial regulatory and financial support through a mix of Executive Orders and agency action including a goal of quadrupling nuclear capacity by 2050.

On the energy buyer side, leading data center hyperscalers have announced plans to restart existing plants as well as new projects. Moreover, the Executive Branch announced financial guarantees to Westinghouse and Cameco to deploy ten Westinghouse AP1000 units, setting a demand baseline that will help mobilize the supply chain and accelerate project execution lessons learned. Taken together, these announcements represent over 10 GW of potential nuclear power capacity expansion in the U.S. — equivalent to approximately 10% of the current installed base. While these announcements are material, they do not yet constitute a structural inflection in national capacity deployment.

Owner announcements, executive orders, and capital flows, however, are far from sufficient to guarantee demand materialization in the next decade, much less a nuclear renaissance. While such capacity additions would reverse the net reductions over the last 30 years, they would constitute only a marginal nuclear power contribution to electricity demand growth. Some investors and energy planners, however, are extrapolating the favorable nuclear regulatory, policy, and technology trends into step-change expectations in nuclear power capacity longer term, as illustrated in Figure 3.

While expected capacity additions over the next few decades are far lower than the peak of the 1970s, the industry challenges remain substantial. The industry's past, characterized by unfulfilled expectations, serves as a stark reminder. For instance, following the submission of 31 new build license applications in the U.S. between 2007 and 2009, only Southern Company's Vogtle 3&4 ultimately reached completion. Enthusiasts, however, claim “this time is different”, a sentiment that likely reminds seasoned executives of past, overhyped market trends.

The central question is whether today's demand environment fundamentally alters the commercial calculus for suppliers. In some regards, current dynamics indeed differ from the above-referenced Nuclear Renaissance. Crucially, unlike the 2005–15 period when consumer electricity demand was essentially stagnant, current growth expectations — driven by data center construction and a broader increase in electrification — are unlike anything seen since the last major nuclear build cycles in the 1970s. As Figure 4 demonstrates, while still far from the 1960–70s pace of growth, even conservative electricity demand growth projections surpass expectations at the time of the false-start Nuclear Renaissance.

Just as important as the scale of the demand potential is its alignment to both commercial interests of a concentrated set of customers as well as national interests. Because a handful of sophisticated tech companies rely on power supply expansion (preferably zero emissions), demand certainty and proactive engagement is more easily secured than if demand growth were diffused across uncoordinated commercial and residential interests. Unlike previous nuclear new build waves, some customers are engaging not only with project owners but also reactor suppliers, financing entities, and regulators. Moreover, the link between data centers and the geopolitical race for AI leadership brings executive branch support. Specifically, the Trump administration has committed to licensing acceleration and expanded optionality for DOE licensing through its May 2025 Executive Orders.

Lastly, new business models are emerging which promise to partially mitigate the financing and project risks that loom over the nuclear new build environment. For example, a growing list of prospective development companies leverage private equity and venture capital funding to bridge financing gaps. Some also include engineering and project management leaders from previous new nuclear projects from which to apply cross-project learnings, increase efficiencies, and reduce project execution rework.

Despite the concurrence of supply and demand spurs in the last couple years, a wide mix of keys are still needed to unlock the potential for a 20+ GW decade of nuclear capacity expansion. Nuclear new build component and/or service suppliers face a complex web of interdependent and highly uncertain market signals to determine if, when, and how aggressively to invest in resources, equipment, and commercial initiatives. Suppliers' nuclear go-to-market strategy planning should be guided by five key assessments, three external and two internal:

Demand timing

New energy technology projected adoption curves are typically widely diverging hockey-stick slopes depending on the mix of technology maturity, policy, and other assumptions as well as the inherent bias of the source. Reality often lands in the middle but that still leaves a wide range of potential medium and long-term demand levels against which suppliers must plan. For example, solar PV demand in the early 2010s consistently outpaced expectations of neutral observers while more recent projections for green hydrogen uptake have so far proven to be wildly optimistic. Nuclear power faces similar unpredictability, compounded by two specific issues. First, order book realization is highly influenced by government support mechanisms which, despite the bipartisan support, can ebb and flow with changes in national and state administration. Second, the scale of discrete nuclear projects (between hundreds of MW and multi-GW per project vs. kW-scale for solar PV) creates “lumpy” demand. Accounting for these and other factors, suppliers should view nuclear demand projections as bi-modal: a non-zero probability exists for very low adoption (a repeat of the 2010s) alongside a medium to medium-high probability of 20+ GW per decade demand. Probabilistic analysis-based strategic planning is more challenging and execution necessitates greater agility than may be required for other markets.

Technology mix

The current era of potential nuclear power growth is marked by a more diverse set of technology outcomes compared to past cycles, presenting a complex challenge for suppliers. The range of reactor designs includes traditional boiling water reactors (BWRs) and pressurized water reactors (PWRs) as well as advanced reactors with innovative fuel types such as high-assay low-enriched uranium (HALEU) and coolants such as molten salt. While current technology optimism derives from interest in small modular reactors (SMR) for data centers, military bases, and off-grid applications, the AP1000 retains a head start with completed and in-progress projects as well as federal backing. Furthermore, the emerging market for micro-reactors introduces a new segment of demand but simultaneously broadens the overall uncertainty in demand forecasting. Suppliers who require product development investments tailored to one reactor type or another should consider the relative constructability, financing, licensing, and other advantages across reactor types and specific OEMs.

Competitive landscape

Similar to other new energy markets, anticipating the demand and thus market share for any supplier is as much art as science. In any given part of the supply chain, a mix of U.S. and international players are making similar evaluations with no clear outcome such that suppliers could face any range of competitive intensities.

Organizational and capability readiness

While nuclear industry quality, safety, and design rigor requirements pose little challenge for established nuclear companies, they create significant entry barriers for newcomers. These barriers go beyond core product development, necessitating investments in new resources, processes, tools, product quality assurance, safety programs, and cultural change. Suppliers must proactively account for these factors in their initial business planning to prevent unexpected difficulties and future regrets.

Risk appetite

A supplier's enterprise risk tolerance must be a core consideration, not an afterthought, when planning a market entry strategy for nuclear projects. Suppliers pursuing nuclear as a short-term growth platform need a clear understanding of the fundamental uncertainties related to investment requirements, margin potential, and demand.

How these dynamics translate into real supplier decisions is illustrated in two case studies of Solestiss-led projects — one for an incumbent supplier and the other for a potential new entrant.

The path to established nuclear energy supply and demand will be more protracted and volatile than other energy sub-sectors, let alone non-energy markets where some participants are active. For certain suppliers without a nuclear focus, such as EPCs and component manufacturers, pursuing a nuclear market entry strategy is challenging due to the potential opportunity cost of widening the focus from an already robust non-nuclear project backlog.

The last year may eventually be looked back upon as a transition year for nuclear equipment and services suppliers, although given long lead times of projects, the data will not show an inflection point in 2025 or even the next few years. Many participants in last decade's nuclear stall-out are still nursing their wounds and thus may apply an even greater risk premium than current dynamics warrant. There is no well-defined nuclear market entry strategy. Suppliers will need not only to develop strategies tailored to their products, capabilities, and risk appetite but also adopt a degree of capital planning agility and risk mitigation that likely exceeds recent, non-nuclear growth platform endeavors.