By Andrew Wetzlel, CFA®, Managing Director of Sustainable Investing
The long-anticipated nuclear renaissance is taking shape. A combination of insatiable power demand, supportive tax and regulatory frameworks, the drive to decarbonize, and advancements in technology is driving a new wave of nuclear development in the US. Nuclear generation, like geothermal, represents clean baseload power with a real potential to reduce the carbon intensity of the power sector and support the capacity growth required to enable technology-led growth in the years ahead.
The US nuclear industry took shape in the 1950s, with fission plant development ramping through the 1970s. Social pushback, tightening regulations, higher costs, and then the Three Mile Island accident led to a collapse in new project approvals. Projects approved prior to the late 70s were eventually built, driving total operating nuclear power capacity to over 100GW by 1990. Since then, energy efficiency efforts and abundant natural gas have kept power prices low, capping further nuclear development. That is now changing as power demand inflects higher, as discussed in prior letters. Higher power prices signal new development is needed and create an opening for early-stage (initially higher-cost) options to emerge.
Today’s nuclear technology landscape spans traditional large light-water reactors (LWRs), small modular reactors (SMRs), and micro-reactors. Traditional large LWRs use highly pressurized water for cooling and heat transfer, requiring containment domes and large cooling towers. These plants require years of skilled on-site construction that is hard to scale. The latest US large LWR, Plant Vogtle, is a clear reminder of the physical complexities and high cost of single-site traditional nuclear development. New entrants and industry incumbents have pivoted toward advanced approaches that address engineering and safety challenges head on.
New advanced nuclear approaches are generally smaller in scale and use factor-built modular units to create power generation systems. SMRs are typically between 50MW and 300MW of capacity, while micro-reactors are units below 20MW. Companies such as GE Vernova, Hitachi, and Holtec make LWR SMRs with improved safety features. Sodium- cooled fast reactor technology approaches are being developed by companies like Oklo and TerraPower that run at near atmospheric pressure and can use nuclear waste as fuel. Other approaches like Kairos Power’s molten salt and X-energy’s pressurized gas technologies offer improved safety and high temperature heat that can be sold to industrial companies. Micro-reactors like those being developed by Westinghouse and Radiant use solid core liquid sodium and high temperature helium designs respectively that are virtually meltdown proof (like many of the SMR designs). Micro-reactors fit in a standard shipping container, broadening the reach of nuclear to smaller-scale and remote power demand locations. Business models vary too: some companies (e.g., Oklo) will build infrastructure and sell power, while others (e.g., X-energy) will license designs and sell related services, including fuel.
A 2025 executive order called for quadrupling US nuclear power capacity to 400GW, pointing to the potential growth ahead. Financing infrastructure at this scale will require capital from many sources. Private venture capital (VC) funding has helped catalyze early R&D, supported testing and development of operating plans, and helped start-ups navigate licensing applications. Over the 24 months to June 30th 2026, VC fission funding totaled just over $3 billion, based on BNEF data.
Early development work funded by VCs has enabled larger funding deals and, importantly, power purchase agreements (PPAs) with hyperscalers intent on long-term decarbonization. Starting late in 2024 and continuing into 2026, hyperscalers have announced PPAs and other commitments in excess of 10GW, representing tens of billions of dollars of long-term revenue, unlocking traditional project finance and debt markets. A few of these start-ups, including Oklo and X-energy, have leveraged these anchor relationships to support entry into the public equity market, raising additional capital.
Private capital and advanced nuclear startups are not alone in the new nuclear development race. The US government clearly views increased nuclear capacity as a national security priority. A public-private partnership announced in October 2025 is set to restart the large LWR industry. The agreement between the US government and Westinghouse Electric for 10 AP1000 and AP300 reactors will have $80 billion in capital investment from the US-Japan Framework Agreement as an anchor.
In addition to capital availability, government policy and regulatory actions support domestic development. The IRA created tax credit frameworks for nuclear power production, while the OBBBA phased in restrictions against supply chain sourcing from foreign entities of concern. More recently, the Nuclear Regulatory Commission has modernized regulations governing reactor licensing, decision timelines, hearings, and fuel fabrication. Taken together, US government actions over the last few years have radically transformed the operating environment for new nuclear construction.
Despite the positive momentum, the industry must navigate several supply chain risks to achieve commercialization and scaled operations. Decades of limited nuclear development have left a limited, aging workforce of skilled labor across all aspects of nuclear development and operation. Additionally, most components for large LWRs and many for SMRs and micro-reactors do not have domestic suppliers. These development challenges are distinct from operating challenges, where fuel availability is a looming bottleneck. While the low-enriched uranium (LEU) fuel (3-5% enriched) used for LWRs is already tight, most next generation reactor types require high-assay low-enriched uranium (HALEU) fuel (5-20% enriched). Today the US has just one demonstration-scale HALEU production facility, capable of producing only a small fraction of potential demand by 2030, before nuclear capacity is set to scale in the 2030s. Given the physical complexity and scale of development required, delays should be expected, though these will likely be learning experiences and growing pains as the industry gets back into growth mode.
While fission development is clearly well underway, nuclear fusion remains the ultimate clean-energy prize. The achievement of scientific breakeven (more energy produced from a fusion reaction than the energy used to drive it) at the National Ignition Facility in late 2022 catalyzed private capital investment in fusion. Startups like Commonwealth Fusion Systems and Helion Energy are building pilot plants and targeting breakeven before the end of the decade, with commercialization quickly following. Unlike fission, fusion poses no meltdown risk and does not create long-lived radioactive waste, enabling a more streamlined regulatory framework. While risks around fuel availability and materials degradation are hurdles, fusion energy does appear to be on the horizon within the next 5-10 years. This is a potential power gamechanger that investors should have on the radar.
The US is poised for a significant expansion in nuclear energy, with technology and design advancements meeting increasing power demand, financial backing, and a supportive policy environment. Supply chain risks are real, though so are the power needs and decarbonization goals of the hyperscalers. With zero-carbon and baseload characteristics, support for nuclear development is increasingly broad, and we expect many years of growth ahead.
