New generation: the next era of nuclear power

Interview with Low Carbon Transition Group experts:

• Mark Muldowney, Managing Director, Low Carbon Transition Group, BNP Paribas CIB
• Romain Talagrand, Global Head of Power & Renewables Financing, Low Carbon Transition Group, BNP Paribas CIB

Nuclear power is entering a period of renewed attention in global energy policy. Governments across the world are advancing programmes to extend the life of existing plants and develop new reactor technologies, including Small Modular Reactors (SMRs). The UK’s Great British Nuclear initiative, France’s plan to build up to 6 new EPR2 (European Pressured Reactors II) nuclear reactors, and the inclusion of nuclear in the EU’s Net Zero Industry Act all reflect a wider effort to secure reliable low-carbon electricity.

This renewed policy focus reflects a changing energy landscape. As economies electrify transport, heating, and industry, and as artificial-intelligence data centres multiply, electricity demand is climbing sharply. The International Energy Agency now expects global power use from data centres alone to almost double by 2030. In this context, nuclear power is being considered not as a competitor to renewables, but as a complementary source of dependable, low-carbon electricity that can help stabilise grids and strengthen energy security.

To explore these dynamics, we spoke with our Low Carbon Transition Group experts in the energy transition to discuss what is driving momentum, the potential of emerging reactor designs, and the role of finance in enabling delivery.

What’s driving nuclear’s renewed momentum?

Two issues are driving the change: the pursuit of net zero and the need to secure domestic energy.

“Despite huge progress in renewables and battery electricity storage, every credible pathway to net zero still needs a form of low-carbon baseload,” says Mark Muldowney. “Nuclear power remains for now the only option at scale.”

He adds that the geopolitical shocks of recent years have reinforced this argument. “A less predictable international environment has reminded governments how vulnerable power systems can be. Nuclear power provides a degree of stability that is today difficult to replicate.”

At the same time, fast-growing electricity demand from AI and data-centre operators is prompting new types of long-term power contracts, as companies seek to secure dedicated power supplies for data centres. “The spike in power demand is driven by electrification of the economy in general, but especially the digital economy.” Much of the current interest in nuclear in the UK is driven by meeting the projected demand from this sector and some of the hyperscalers have been prepared to assist in the development of SMRs (Small Modular Reactor) by offering offtake contracts to support commercialisation. Elsewhere we have seen companies restarting or extending the life of old nuclear facilities.

How are funding arrangements for nuclear power projects evolving?

Once the preserve of governments and utilities, nuclear power projects are now attracting a broader range of investors. “Industrial and financial players are beginning to engage,” says Muldowney, pointing to  Centrica, La Caisse and Amber Infrastructure’s involvement in Sizewell C.  BNP Paribas supported Sizewell C on a £5.5 billion debt package to finance construction of the Suffolk-based nuclear power plant acting as Joint Debt Advisor and Mandated Lead Arranger.

He explains that investors are increasingly drawn to nuclear plants’ long operating life and predictable revenue stream. “A nuclear plant can generate stable cash flows for up to 80 years, which is very attractive to investors looking to match long-term liabilities,” he says.

Talagrand adds that government involvement remains essential to give investors’ confidence. “Clear, consistent policy signals make the difference. When investors can see how risk is shared between the public and private sectors, appetite follows.”

Small Modular Reactors: real promise or distant prospect?

More than 80 organisations are developing SMR concepts ranging from micro-reactors to 470 MW designs. “The idea is to build in factories and assemble on site,” Muldowney explains. “That shortens construction, improves quality control and helps manage risk.” 

No SMR has yet been built in the West, but early signs are encouraging. Talagrand says, “SMRs are now being viewed as genuine contenders for near-term deployment.”  There is strong interest in SMRs in the US, backed by both private and federal funding.

And crucially, the modular approach could cut construction time from a decade to as little as three to five years. “I’m confident SMRs will shorten timelines,” adds Muldowney. “The first few will inevitably face challenges, but the faster we move through that learning curve, the better.”

How large a piece of the energy puzzle is nuclear set to be?

Much of Europe’s immediate nuclear activity is focused on replacing ageing capacity. In the UK, Hinkley Point C and Sizewell C will effectively substitute for plants closing this decade, while France’s EPR2 programme will renew its existing fleet.

The financial close of Sizewell C on the 4^th of November is an important landmark in private sector involvement in new nuclear.  BNP Paribas is also advising on debt raising for the first Polish nuclear project, where government owned PEJ is planning to build 3 Westinghouse AP1000 reactors, and advising Vattenfall AB in Sweden.

Beyond replacement, both experts see nuclear as providing low-carbon baseload power that complements renewables rather than competes with them. Talagrand adds that renewables and nuclear “can and will coexist. Renewables will arrive first as they are faster to deploy, but nuclear underpins long-term reliability.”

“It’s complementary,” says Muldowney. “Nuclear power provides the stability and reliability that allow wind and solar to keep expanding. Together they make a stronger, more resilient system.”

Modern nuclear power technology is also becoming more flexible. In France, EDF has already demonstrated the ability to ramp production up and down within limits and future reactor designs, including SMRs, aim to go further. “There’s not as much flexibility as battery storage, but it shows that modern nuclear power systems can contribute to system flexibility.”

Muldowney adds that some SMR designs are being developed specifically for load-following operation, which in the future could enable nuclear to adapt more closely to fluctuating renewable output. “It’s not the most efficient mode for nuclear, but it gives system operators more options.”

As energy demand keeps climbing, the push for low carbon power grows stronger. Nuclear power is stepping back into the spotlight – not to compete with renewables, but to work alongside them, keeping the lights on when and where it matters most. With new technologies on the horizon and more private capital coming in, banks like BNP Paribas have a big part to play in making these projects real.