Nuclear energy is having something of a "rebirth" for a variety of reasons, and the author of this article explores the investment and business case.

The following article about the energy sector, and nuclear energy in particular, comes from Tyler Rosenlicht, head of natural resource equities, Cohen & Steers, a US-headquartered investment firm. This is a topic that this news service has written about before, see an example here.

Tyler Rosenlicht

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Nuclear energy is experiencing renewed momentum after decades of stagnation. With surging global power demand and continuing climate commitments, nuclear power is a growing pillar for reliable, clean electricity and future energy security.

The early stages of a global nuclear buildout
Nuclear power’s share of global electricity generation has declined from its 1980s peak of 17 per cent to roughly 9 per cent today, despite maintaining stronger resilience in markets like the US, where it still provides approximately 18 per cent of electricity generation. The period following the 2011 Fukushima disaster marked a particularly difficult phase, with new reactor starts barely offsetting shutdowns globally, leading to systematic underinvestment across the entire nuclear value chain. High-profile cost overruns like those at Plant Vogtle (a new-build reactor in Georgia) have increased the damage to nuclear’s reputation and deterred investment. The Georgia project’s costs doubling from $14 billion to over $30 billion, combined with decade-long delays, exemplifies the financial risks that make utility providers and investors wary of new nuclear construction.

These budget disasters create a vicious cycle: Fewer projects mean reduced learning and economies of scale, while regulatory uncertainty and construction inexperience drive costs even higher on future builds.

Yet today’s landscape tells a markedly different story. The current global stock of approximately 440 reactors is projected to expand to about 500 by 2030, with over 400 additional reactors in various stages of planning and development. This growth trajectory reflects not just renewed confidence in nuclear technology, but a fundamental recognition that achieving deep decarbonization at scale requires dispatchable, baseload power sources that can complement the inherent intermittency of renewable energy.

The four-phase nuclear development strategy
We believe the path to nuclear expansion follows a pragmatic, phased approach that maximizes existing assets while building toward next-generation capabilities.

Extending the operating lives of existing reactors (2022 to 2026): With the global nuclear stock having a median age of 32 years and 66 per cent of reactors exceeding 31 years, license extensions represent the most immediate and cost-effective way to preserve nuclear capacity. For the past decade, the world has generally been decommissioning these reactors across Europe and North America. However, we have observed numerous extension agreements in recent years and expect this trend to continue.

Reactivating previously suspended but still operable facilities (2024 to 2028): Countries like the US, Japan and India have reactors that have been shuttered but could potentially return to service safely in the near-to-medium term. These represent relatively quick wins in capacity restoration, without the lengthy timelines associated with new construction. The recently-announced restart of Three Mile Island is an example of “turning back on” stagnant capacity.

Leveraging brownfield development of existing or former nuclear sites (2026 to 2035): This approach benefits from established infrastructure, regulatory familiarity and community acceptance while reducing development risks. We expect to begin seeing announcements of new construction and development activity inside existing reactor sites in the coming years.

New large-scale reactors, small modular reactors (SMRs) and future technologies (2030 to 2040): We believe the industry will see a wave of new development activity toward the end of this decade. This includes large-scale new nuclear developments as well as the scaling and installation of new technologies. Many of these will likely require government support and/or guarantees to greenlight projects.

Critical success factors
The nuclear industry’s growth depends on addressing three fundamental challenges that have historically constrained expansion.

Continued technological development remains paramount. While traditional reactor designs will continue serving important roles, advanced reactor concepts – including SMRs, molten salt reactors, and eventually nuclear fusion – are essential for nuclear energy’s long-term competitiveness. Many of these advanced designs require different fuel types, particularly high-assay low-enriched uranium (HALEU), which presents both opportunities and challenges for the fuel supply chain.

Regulatory rationalization represents another critical enabler. The nuclear licensing process, particularly in the US under Nuclear Regulatory Commission oversight, has historically been complex and time-consuming. The development of the Part 53 framework, mandated by the Nuclear Energy Innovation and Modernization Act, aims to create more efficient regulatory pathways for advanced reactors while maintaining rigorous safety standards. However, this framework remains in development, and successful implementation will be crucial for enabling timely SMR deployment. In addition, it is likely going to require government support and investment to catalyze large-scale investments by private industry, given the long construction cycles of nuclear assets.

Perhaps, most importantly, the industry must rebuild supply chains weakened by decades of underinvestment. The nuclear fuel cycle encompasses multiple critical steps: uranium mining, conversion to UF6, enrichment, fuel fabrication, power generation and waste management. Each step presents potential bottlenecks that could constrain growth – but each may also present opportunities for investors.

Uranium supply challenges and opportunities
Looking ahead, the industry faces a projected structural supply deficit in uranium by the 2030s, as growing demand outpaces production from existing and planned mines. This potential shortage could support higher uranium prices, benefiting mining companies while creating cost pressures for utilities. The contracting dynamics are important: Utilities typically secure most uranium through term contracts spanning five to 10 years, providing some price stability but also creating long-term supply certainty.

The nuclear fuel supply chain reveals both vulnerabilities and investment opportunities. Conversion of mined uranium to enriched fuel represents a notable bottleneck, with significant production capacity concentrated in Russia and China. Geopolitical tensions have highlighted the risks of overreliance on potentially adversarial suppliers, creating urgent needs for domestic capacity development.

Enrichment capabilities present even more acute challenges. While the supply chain for low-enriched uranium used in existing reactors is reasonably well established, many advanced reactors require HALEU enriched to 5 to 20 per cent U-235. Global HALEU supply is currently severely limited, with production at scale primarily controlled by Russian entities. Establishing reliable domestic HALEU supply chains faces a classic “chicken-and-egg” problem: High upfront investments are required without guaranteed demand from reactor developers, while reactor developers hesitate to commit without assured fuel supplies.

Investment opportunities across real assets sectors
The nuclear industry’s transformation presents a concentrated investment landscape where a limited number of key players dominate due to complex technology requirements, national security considerations and stringent regulatory frameworks. This concentration creates protective barriers that potentially enhance returns for well-positioned investors.

Uranium producers face compelling near-term fundamentals as rising demand from plant extensions, restarts and new construction converges with supply constraints from decades of underinvestment. This supply/demand imbalance supports higher uranium prices, with geopolitical factors adding upside as Western producers benefit from reduced reliance on Russian uranium supplies. Established producers are positioned to capitalize on this reshoring trend while new supply development remains limited.

Utility companies positioned to add nuclear capacity present opportunities, particularly those with existing nuclear expertise and brownfield development potential. Growing interest from hyperscale technology companies seeking reliable, carbon-free power for data centers is an unprecedented demand driver. Utilities with nuclear fleets benefit from life extension economics and potential capacity uprates.

Engineering and construction companies with nuclear expertise benefit from expanding project pipelines as the industry moves through its development strategy. The comprehensive nature of nuclear services creates opportunities for firms that can navigate demanding technical and regulatory requirements. High barriers to entry, including needs for specialized expertise and security clearances, limit competition and protect market positions.

Nuclear equipment manufacturers operate in concentrated markets where exacting requirements and safety standards allow only select companies to compete effectively. This segment benefits from both maintenance needs of the existing fleet and new construction demand. Specialized components and reactor systems represent areas where technical expertise creates sustainable competitive advantages.

Looking toward the mid-2030s, small modular reactor developers represent the highest-risk, highest-potential-return segment. While SMR technologies remain in early development and have uncertain timelines, successful developers could capture significant value as standardized manufacturing scales. However, investors must evaluate risks, including untested designs, regulatory uncertainty and unproven cost structures.

High barriers create compelling opportunities for investors
The nuclear energy sector presents investors with a rare convergence of compelling fundamentals that demand serious consideration. Momentum is building across multiple dimensions simultaneously: Policymakers worldwide are reversing decades of anti-nuclear sentiment, hyperscale technology companies are signing multibillion-dollar power purchase agreements, and supply chain constraints are creating pricing power for positioned players.

This is not a theoretical opportunity requiring investors to time a distant inflection point, but rather an unfolding transformation in which we believe early positioning can capture significant value creation. The sector’s concentrated structure, high barriers to entry, and long project timelines create natural moats for incumbents while limiting new competition.

Leveraging our leadership and experience in infrastructure and natural resource investing, we are actively evaluating opportunities across the nuclear value chain, participating in what may prove to be one of the most significant industrial transformations of the coming decades.

About the author
Tyler Rosenlicht, senior vice president, is a portfolio manager for Global Listed Infrastructure and serves as head of Natural Resource Equities, Cohen & Steers. Prior to joining the firm in 2012, Rosenlicht was an investment banking associate with Keefe, Bruyette & Woods and an investment banking analyst with Wachovia Securities. Rosenlicht has a BA from the University of Richmond and an MBA from Georgetown University. He is based in New York.