09-02-2024 09:00

A new dawn for nuclear energy

Over the past few years, interest in nuclear energy has made a comeback, with its inclusion in the EU Taxonomy and a COP28 pledge to triple nuclear capacity. In a new report, Nordea’s ESG Research team examines this renewed interest.
Nuclear power plant behind a windmill

Nuclear power is experiencing a global revival. While the subject can be highly polarising, general sentiment towards nuclear has improved in the past several years, driven by concerns about energy security, reaching climate targets and the volatility of renewable energy sources. In a new report, Nordea’s ESG Research team takes a look at this resurging interest in nuclear power and its potential implications.

“Nuclear is gaining new supporters, thanks to its low-carbon nature and stable supply,” says Marco Kisic, Head of ESG Research and a co-author of the report. “Public opinion is shifting, with more people in favour of existing or new nuclear assets.”

However, making the case for nuclear is not easy, Kisic notes. Opposition has tended to focus on concerns about nuclear waste management, safety and security. Nuclear waste is highly radioactive and needs to be stored for long periods of time. Apart from the risk of operational issues, such as the accidents at Chernobyl, Fukushima and Three Mile Island, nuclear is also vulnerable to outside interference due to its highly centralised nature.

What’s more, beyond safety and security, the economics of nuclear power are often unattractive. Nuclear plants require a sizable initial capex investment, and new projects have been fraught with delays and budget overruns, according to Kisic. The all-in cost of generating nuclear energy is also higher compared to alternative technologies. 

EU: Installed nuclear capacity (GW), 2015 - 2023 versus nuclear alliance targets and EU planned capacity

Source: World Nuclear Alliance, EurActiv and Nordea estimates

Uranium prices at the highest since 2007 (USD/LB)



Source: LSEG Data & Analytics and Nordea estimates
Marco Kisic, Head of ESG Research, Nordea

A low-carbon complement to renewable energy

Despite its challenges, nuclear does provide something that’s valuable but difficult to value: a large and stable source of energy which reduces the risk of supply-demand imbalances in a fully renewable system.

“We could see it being one part of the solution in specific circumstances,” says Kisic.

As countries make progress towards their climate targets and energy security is prioritised, nuclear power is increasingly being seen as a valid low-carbon complement to more volatile renewable energy. Prices of uranium, the energy source for nuclear power, are reacting accordingly, reaching their highest levels in 17 years.

At COP28, the UN climate change conference in late 2023, 22 countries, including the US, Japan, France, Sweden, Finland, the UK and the UAE, launched a multilateral commitment to triple global nuclear energy production by 2050. 

In the EU, the inclusion of nuclear in the EU Taxonomy, the sweeping classification system for sustainable activities, marked a turning point. In May 2023, 16 European countries launched the “Nuclear Alliance,” lobbying to recognise the role of nuclear in reaching the EU’s climate targets by moving from a 2040 “renewable target” to a “low-carbon” one that would allow nuclear in. 

Nuclear is the second largest source of electricity production in the EU after fossil fuels, although it is concentrated in just a few countries, including France, Spain, Sweden, Finland, Hungary, Slovakia and Czech Republic.

Sweden’s ambitious plan

The Swedish government has also launched an ambitious roadmap to aggressively expand the nuclear asset base of the country. The goal is to open two new reactors by 2035 and up to ten by 2045, a build-out not seen in Europe for several decades. 

Kisic notes that, despite the challenges, the Swedish government appears resolute and has already lifted restrictions on developing greenfield nuclear.

“We see the development of phase one of the roadmap as a moderately likely possibility,” he says. “However, a whole new industry would need to emerge.”