US government backs new nuclear investment

Throughout the history of nuclear power, the industry has always worked closely with governments. When the Westinghouse Electric Company designed the first commercial reactor in the US in the 1950s, it was also working with the US Navy to build nuclear power systems for submarines and aircraft carriers.

The Trump administration showed last week that a strong relationship with the government is as important as ever for the nuclear industry. It launched a partnership worth at least US$80 billion to build new reactors in the US, with Westinghouse and the company’s co-owners, Brookfield Asset Management and Cameco, a nuclear fuel group.

One of the hallmarks of the Trump administration has been its readiness to intervene in markets to pursue its policy goals, and its nuclear strategy is another example of that approach. Chris Wright, the energy secretary, has described the race to develop advanced AI as the Manhattan Project of our times, critical to US national security, and said success will depend on delivering a steep increase in electricity generation.

Speaking to the Council on Foreign Relations in September, he promised: “We’re doing everything we can to make it easy to build power generation and data centers in our country.” The new nuclear initiative is an ambitious attempt to make that pledge a reality.

The first new plants that result from it will come online years after President Donald Trump has left office. But they could play an important role in boosting US electricity supply in the 2030s and beyond.

There is bipartisan support in Washington for nuclear power. The Biden administration worked to keep existing plants open and to encourage the construction of new ones. But the private sector in the US has been unwilling to take on the financial risk inherent in the huge engineering projects needed to build new reactors.

The last new reactors to be built in the US were Units 3 and 4 at the Vogtle plant in Georgia, which came online in 2023 and 2024. They were completed seven years behind schedule, with a cost overrun of well over 100%. Chief executives of investor-owned utilities knew that if they had proposed committing to similar projects, they would have been sacked on the spot.

Now the new partnership with Westinghouse aims to construct at least US$80 billion worth of the same AP1000 reactors that were built at Vogtle.

The full details of the deal, including the precise allocation of financing and risk-sharing, have not been specified. But Brookfield did disclose that the partnership includes profit-sharing mechanisms that will give the US government some of the upside if the initiative succeeds.

The Washington Post reported that after the government signs the final contracts for US$80 billion of new reactors, it will be entitled to 20% of all Westinghouse’s returns over US$17.5 billion.

And if Westinghouse’s valuation goes over US$30 billion, the administration can require it to be floated on the stock market. If that happens, the government will get a 20% stake.

Japan’s government is also playing a key role. As part of the US$550 billion trade deal struck with the Trump administration, the Japanese government pledged large-scale investment in US energy, including nuclear. Japanese companies, including Mitsubishi Heavy Industries, Toshiba Group, and IHI, are interested in investing up to US$100 billion in the US to support the construction of new AP1000s and small modular reactors (SMRs), the two governments said.

Other moves to add additional nuclear capacity in the US have also been announced in the past month. In the 2010s, two new AP1000 reactors were under construction at the VC Summer nuclear plant in South Carolina until the project was abandoned in 2017. Last month, Santee Cooper, the South Carolina utility, said it had selected Brookfield to work on a plan for restarting the project and completing the reactors.

Brookfield is initially working on a six-week feasibility assessment of the potential for restarting work at VC Summer, including selecting a project manager and evaluating construction companies. The six weeks will also allow for advanced discussions with possible buyers for the power from the plant.

Separately, Google last week announced a deal with NextEra Energy to reopen a 615-megawatt nuclear plant in Iowa. The Duane Arnold Energy Center was shut down in 2020, and the aim is to have it operational again by the first quarter of 2029. Google has agreed to buy a share of the plant’s output for 25 years, with the rest being used by the Central Iowa Power Cooperative, which currently has a minority stake in the facility. NextEra will be buying out the minority stakes to take its ownership of the plant from 70% to 100%.

The Wood Mackenzie view

These are exciting times for the US nuclear industry. Assuming an average cost of US$16 billion for each AP1000 – less than at Vogtle, which ended up costing about US$36 billion for the two units – the US$80 billion plan would mean five new reactors. That would be the most active new nuclear construction programme to be started in the US since the 1970s.

If economies of scale and learning-by-doing cut the cost of each reactor, or if additional funds become available, more units could be built.

Prakash Sharma, Wood Mackenzie’s head of scenarios and technologies, says the Trump administration is acting like an energy company: using its financial strength and its convening power to put together a deal that covers the entire nuclear value chain. Between them, the partners can tackle everything from uranium mining, enrichment and permitting to financing and building the reactors and finding buyers for the power.

The deal also supports a range of the administration’s objectives: not only power for AI, but also investment and job creation in US industry. The focus on AP1000s also makes it possible to rely on US-produced fuel, strengthening energy security. Most of the newer SMR designs use high-assay low-enriched uranium (HALEU) fuel, which is not currently produced on a large scale in the US.

However, the strategy’s ambition does not guarantee successful execution. The delays and cost overruns that dogged the Vogtle project will be real threats for this new wave of construction.

A lot was learned from the Vogtle project. Bechtel, which completed construction of the new reactors at Vogtle, said the cost of Unit 4 was already 30% lower than the cost of Unit 3. The first-of-a-kind project is usually the most expensive, and delivering multiple copies of the same reactor ought to create the conditions for a steady decline in costs.

However, with construction at Vogtle having ended last year, some of the momentum is already dissipating, and some of that hard-won knowledge may be lost. Without any other active new reactor projects in the US to move on to immediately, many of the people who worked on Vogtle will have gone into other sectors, such as LNG plants.

Wood Mackenzie’s Sharma says: “The nuclear industry has yet to either deliver or dismiss fears around cost and time overruns.” Wood Mackenzie is forecasting a near-doubling of nuclear generation capacity in the US over the next 25 years, from about 100 gigawatts today to nearly 190 GW in 2050. But even that would be a significant shortfall from President Trump’s goal of adding another 300 GW of nuclear capacity over the period.

The soaring cost of the Vogtle project forced Westinghouse into Chapter 11 bankruptcy protection in 2017. To avoid similar financial strains with this new construction programme, Westinghouse, the US government and their partners will need to show that they can manage the hard work of execution, as well as the high-profile announcements.

In brief

In a move to expedite additional data centre capacity, the US Department of Energy proposed a new rule intended to accelerate interconnection of large loads to the grid. Energy Secretary Chris Wright sent a letter to the Federal Energy Regulatory Commission (FERC), directing it to take jurisdiction over connecting large loads to the electricity transmission grid, and setting out principles intended to make those interconnections “efficient, timely, and non-discriminatory”.  

The energy department set out its ideas in an advance notice of proposed rulemaking, intended to provide the basis for a new FERC regulation. Until now, FERC has not had any authority over interconnections, but Secretary Wright argues that it has legal authority to take on that role.

To avoid criticism that new federal rules would affect states’ jurisdiction over electricity generation, distribution and intrastate transmission, the energy department specified that the new regulations should apply only to large loads connecting directly to the transmission grid. The threshold for the definition of a “large” load is set quite low, at 20 megawatts. New data centres are often proposed with demand in the hundreds of megawatts.

The US and China made some progress in their trade dispute, allowing continued Chinese exports of some critical minerals. China last month moved to tighten export controls for rare earths, battery materials and related products, threatening far-reaching impacts on industries including defence, semiconductors, batteries and electric vehicles. After a meeting in South Korea between President Trump and President Xi Jinping of China, the White House announced a series of measures to de-escalate the dispute, including reductions in US tariffs and Chinese purchases of US soya beans.

The US said China would suspend the global implementation of the new export controls on critical minerals that it announced in October, and also issue general licenses for rare earths, gallium, germanium, antimony and graphite, in effect removing controls imposed in April 2025 and October 2022. China’s Ministry of Commerce said the latest set of controls was being suspended for one year. There was some uncertainty over the implications for Europe. EU officials said it appeared that the latest controls were being lifted for exports to Europe, but the April restrictions remained in place.

The eight members of the OPEC+ group of countries that have been raising oil production announced they would pause the planned increases that they had scheduled for January, February and March next year. Wood Mackenzie analysts are forecasting that there will be some further increases in the second half of 2026, followed by production remaining relatively flat into 2027. That would mean total OPEC crude oil supply growing by 1.1 million b/d in 2026, and only 0.2 million b/d in 2027. Brent crude was trading at about US$64 a barrel on Friday morning, down about US$1 a barrel over the week.

Other views

Slipping climate targets and the “energy addition” – Simon Flowers, Prakash Sharma and Gavin Thompson

China renewables investment powers on – Simon Flowers, Xiaoyang Li, Robert Liew, Sharon Feng and Gavin Thompson

China shifts to 'High-quality'* renewable growth with new pricing mechanism following 264 GW boom in H1 2025

Five things to watch at COP30 – David Brown

US utility large load commitments reach 160 GW amid unprecedented PJM demand surge

US LNG expansion: Balancing growth ambitions with oversupply risks – Kristy Kramer

Do renewables lower electricity prices? Lessons for an energy affordability agenda – Lauren Teixeira

Batteries are crucial technology for the 21^st century – Fatih Birol

Quote of the week

“We’ve got the power you need. It’s the most efficient, reliable, sustainable power on Planet Earth.”

Abdulaziz bin Salman, Saudi Arabia’s energy minister, highlighted the kingdom’s low cost of renewable power generation in a speech at the Future Investment Initiative conference in Riyadh last month. He cited examples of both solar and wind projects in Saudi Arabia that were achieving the lowest costs for their sectors anywhere in the world.

His presentation has details, as well as a lot of other useful data about Saudi Arabia’s power sector. You can find it from around 8h 23’ 17” in this video.

Chart of the week

This comes from the executive summary for Wood Mackenzie’s 2025 Energy Transition Outlook, our flagship publication setting out our view of likely outcomes and possibilities over the next 35 years. The chart shows expectations for global electricity supply and demand in 2050: where the power will come from and how it will be used. One key point to notice: in our base case forecast, electricity demand is set to double over the next 25 years. In a world on course for net zero emissions, the growth would be even stronger.

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