The cost of America’s nuclear revival
Donald Trump has promised to build fleets of new reactors to help ‘win’ the AI race. But many think the goals are unrealistic
Jamie Smyth in Covert Township, Michigan
© Victor Hilitski/FTOn an industrial site on the shores of Lake Michigan, hundreds of workers are racing to do something that has never been achieved before: restart a US nuclear power plant scheduled to be decommissioned.
Seven years ago, Entergy, a utility company and former owner of the Palisades plant, told staff it was no longer economically viable and would need to close.
The fracking revolution, which produced seemingly limitless cheap natural gas, and two decades of stagnant power demand had dimmed investors’ appetite for a technology that generates about a fifth of US electricity, Entergy said.
“There was a lot of frustration among staff because the plant was operating very, very well and it was shut down for reasons out of our control,” says Michael Lee, who worked at Palisades for more than 20 years before the plant closed in May 2022 with the loss of hundreds of jobs.
Yet the 58-year-old former control room operator has now come out of retirement. As part of a dramatic turnaround in the industry’s fortunes, he is helping to restart Palisades, a half century-old plant two hours’ drive north-east of Chicago which has become a symbol of a nuclear resurgence taking root across the US.
Maintenance staff work on a turbine at the Holtec Palisades plant in Michigan © Victor Hilitski/FT
The revival is being driven by power demand from artificial intelligence data centres and reshoring of manufacturing, which is straining energy grids and pushing up electricity prices.
Big Tech is attracted to nuclear because it provides clean power that does not suffer from the intermittency that is a feature of solar and wind energy.
Concerned that a power crunch could delay the roll out of data centres, Microsoft and Google have signed long-term power deals to support the reopening of shuttered nuclear plants in Iowa and Pennsylvania.
President Donald Trump has also embraced atomic energy, pledging to slash regulation and invest tens of billions of dollars to reopen and build new fleets of reactors to provide the power needed to “win” the global AI race.
In May he set a goal of quadrupling US atomic energy capacity by 2050, a massive undertaking that would involve building hundreds of new plants.
And in October Washington inked an $80bn partnership with private equity group Brookfield and reactor designer Westinghouse, which aims to kick-start construction of eight large-scale nuclear plants.
Last year private investors funnelled a record $3bn into start-ups building smaller modular reactors, technologies that provide a third or less of the power of large-scale nuclear plants.
In 2024, Amazon bought a stake in X-energy, a reactor developer with power supply agreements to support the construction of 144 small modular reactors (SMRs) in the US and UK.
“We are not constrained by chips, data pipes, land or capital to build AI data centres.
We are only constrained by availability of electric power and that is why you are seeing such significant capital being allocated to nuclear energy,” says Clay Sell, chief executive of X-energy.
“The US cannot win the AI race against China without nuclear power.”
But in an industry subject to high financing, regulatory and reputational risks, not everyone is convinced the resurgence will be sustained.
Only a handful of mothballed nuclear plants in the US are capable of being restarted, critics warn, and building large-scale reactors from scratch is a highly complex undertaking prone to delays and cost overruns in western nations.
None of the more than 50 SMRs under development in the US has proved they are commercially viable yet nor obtained an operating licence from the US Nuclear Regulatory Commission.
“The industry is boasting about how things are different now and they are going to build fleets of new reactors, large and small,” says Edwin Lyman, a physicist at the Union of Concerned Scientists and critic of nuclear energy.
“But the fundamentals haven’t changed: nuclear is more expensive than other forms of energy and still poses a risk of accidents and proliferation.
You can’t wish these problems away, so I think Trump’s so-called nuclear renaissance is built on a house of cards.”
In the cavernous turbine hall at the Palisades plant, the mood is upbeat among employees as they adjust generating equipment that is expected to begin producing electricity within weeks.
Holtec International, the company that purchased Palisades from Entergy in 2022 with the intention of decommissioning it, has secured $3.2bn in US government support for the project.
The money is being used to upgrade equipment, to subsidise the rural utilities that will purchase its electricity and to build two SMRs, which will boost output to 1,400 megawatts of electricity, or enough to power 1.4mn households.
“It’s a phenomenal project that will benefit Michigan, the United States and have an impact around the world,” says Mike Mlynarek, vice-president of the Holtec Palisades nuclear plant, during a tour of the facility.
He says reopening Palisades is a much cheaper and faster way of adding power to the grid than building nuclear reactors from scratch.
It has also created the first regulatory pathway to restart reactors, Mlynarek adds — an achievement now being replicated at the Three Mile Island nuclear plant in Pennsylvania and the Duane Arnold nuclear plant in Iowa.
Last November Baltimore-based Constellation Energy secured a $1bn federal loan from the Trump administration to restart one of two reactors at Three Mile Island, which is the site of the worst nuclear accident in US history.
TMI’s second reactor was closed in 1979 after a partial meltdown caused a radiation leak.
The plant’s first reactor was shuttered in 2019 for economic reasons.
Constellation is targeting a restart in late 2027, after signing a 20-year power deal with Microsoft.
Daniel Eggers, Constellation’s executive vice-president, says the first priority for the industry is to make sure no more nuclear plants close.
It also aims to get more energy out of existing assets by uprating plants to run at higher power levels.
But if the US has any chance of quadrupling its nuclear capacity, companies like Constellation will have to agree to build or operate new nuclear power plants, an option that Eggers says the company is exploring.
“We have operating expertise and a lot of natural advantages that could make us early movers.
We have land and a lot of infrastructure at our existing sites — water, transmission, rail and roads — in communities that already embrace nuclear,” says Eggers.
“But we have reservations about putting significant amounts of our capital at risk in early stages of this.
So how we parcel out that risk becomes really important.”
The US’s 94 reactors have a capacity of about 100 gigawatts.
To quadruple output, an additional 15GW of nuclear capacity would have to be commissioned every year from 2030 to 2050.
This would be a record amount that surpasses the peak annual commissioning of 10.5GW in 1974, according to a report by T Rowe Price, a global asset manager.
The report warns that “cost and bankability” threaten the US expansion plan, citing previous cost overruns at the last two large-scale reactors built in the country at Plant Vogtle in Georgia, where two reactors had been built in the 1980s.
Vogtle 3 and 4 entered operation in 2023 and 2024, seven years behind schedule and $18bn over budget.
Construction costs had soared to $15,000/kilowatt, about five times higher than nuclear projects in South Korea, the report said, and significantly above China, India and France.
The project was the first-of-a-kind deployment of a new reactor design by Westinghouse called the AP1000, the most technologically advanced US-designed large-scale reactor that has been approved by regulators.
But poor management, workforce shortages and supply chain challenges contributed to delays, say two people who worked on the project.
The cost overruns have caused consumers’ electric bills to soar by more than $500 a year since 2022, sparking a backlash from voters who ousted two Republicans in an election to Georgia’s Public Service Commission in November.
The huge losses racked up by Westinghouse eventually forced the company to apply for Chapter 11 bankruptcy protection in 2017, an outcome that has made utilities wary of committing finance to large-scale nuclear plants.
“Before we go down that path, we’re going to have to have some things figured out . . . [including] overrun protection from the federal government or others to be able to protect our customers and our investors from any overruns,” Harry Sideris, chief executive of Duke Energy, which operates the second-largest nuclear fleet in the US, told investors in August.
Talks between the nuclear industry, hyperscaler customers and the Trump administration on this type of insurance have so far not led to an agreement.
An early test of investor appetite to finance large-scale reactors in the US will take place at a sprawling site near Jenkinsville in South Carolina, which hosts the uncompleted Virgil C Summer nuclear power station.
Eight years ago, Santee Cooper, a state-owned utility, and South Carolina Electric and Gas abandoned plans to build two new Westinghouse AP1000 reactors on the site after racking up $9bn in costs due to delays in construction.
But now Brookfield is in negotiations to buy them.
For the group, the VC Summer proposal represents an opportunity to fast track its $80bn partnership with the US government to build a fleet of AP1000s.
The draft Brookfield-US government deal, which was negotiated by Howard Lutnick, US secretary of commerce, has some unusual features including a commitment by the government of Japan to supply up to $100bn to build the reactors from a $550bn investment fund it agreed to set up as part of an US-Japan trade agreement signed in July.
The partnership also includes a profit share mechanism that might enable the US government to build a stake in Westinghouse and force its eventual public listing.
And in October, Carl Coe, chief of staff at the Department of Energy, suggested the US government could buy and operate nuclear plants built under the arrangement, noting there was “a national emergency”.
“This is a very meaningful order that will get the supply chains and the labour pools moving,” says Wyatt Hartley, managing partner and chief financial officer at Brookfield.
He says multiple orders are critical to bringing down costs and avoiding delays, citing the success of China’s build-out of several AP1000 reactors since 2009.
The Trump administration is also trying to establish a national champion, which can help it meet its power supply needs at home while selling American nuclear technology overseas to compete against foreign rivals.
“The AP1000 can do a lot of the heavy lifting for meeting the 2050 target to quadruple nuclear capacity and meet power demand.
It can also help [the US] compete with China,” says Seth Grae, chief executive of Lightbridge Corporation, which develops nuclear fuel technology.
“China has been building reactors faster and at a more predictable cost than the US and has some advantage, but it can’t corner the market.
If the $80bn [deal with Brookfield] is managed effectively, the US can get there by using the same teams to build six or seven reactors — and from then on the next reactors should cost about the same and be delivered as quickly as the seventh,” he adds.
Under the agreement Brookfield, rather than Santee Cooper, is responsible for funding the construction and would own 75 per cent of the nuclear plants.
“I like this new model . . . and hope it starts a trend in the US,” says Jimmy Staton, chief executive of Santee Cooper, adding that it would be the first time that the risk would fall on private equity rather than utilities and their customers.
But analysts say replicating the cost reductions achieved in China will be challenging for contractors due to the different regulatory and financing models in the US.
And without some form of government-backed overrun insurance, Westinghouse and other reactor companies could struggle to persuade utilities to partner on new projects.
“It is antithetical to think that the public has major affordability concerns right now and utilities would double down on nuclear, which has among the highest cost of energy due to the large upfront capital investment required,” says Julien Dumoulin-Smith, power, utilities and clean energy analyst at Jefferies.
“The real question is whether the data centre community will step forward and underwrite these multibillion-dollar investments, as I just don’t see the federal government providing a backstop.”
So far the technology giants have been reluctant to underwrite the cost of building large-scale nuclear plants, preferring instead to support restarts and life extensions of existing reactors.
But they have begun to sign agreements with companies developing SMRs, which advocates say are cheaper and quicker to build as they are made as prefabricated units in factories and shipped and installed on site.
In August, Google agreed to buy a small amount of power from a demonstration reactor being built by Kairos Power, in what it said was the first binding contract with a next generation SMR developer.
Oklo, which is backed by OpenAI founder Sam Altman, says it has around 14GW of power supply agreements.
Analysts say these technologies could play a role in delivering Trump’s nuclear renaissance, as they do not require as much upfront capital to build and deploy as large-scale nuclear.
Investors are betting some of the new reactor developers will be successful, funnelling record amounts of cash into the sector and pushing up company valuations.
But experts warn technical and regulatory challenges must be overcome before the first SMRs are launched.
Just a single company, NuScale, has had their reactor design approved by the US Nuclear Regulatory Commission and none have been granted an operating licence.
The Trump administration is fast-tracking licensing procedures and reforming what it calls a “risk-averse” culture at the regulator.
But this has prompted push back from former commissioners and staff, who have warned that a brain drain at the agency could lead to licensing delays and even increase risk of accidents.
“I’m concerned about the attack on the independent regulator.
Trump has put his thumb on what they are doing and how they do it,” says Allison Macfarlane, who served as NRC chair from 2012 to 2014.
“If you are not a strict and independent regulator and either the industry or politicians are pushing you to cut corners or make changes then of course the risk of accidents goes up.”
Macfarlane adds there is “absolutely no way” Trump’s goal of quadrupling nuclear capacity by 2050 can be achieved because of the length of time it takes to build reactors in the US and the high costs.
But other industry experts disagree, arguing the goal is achievable.
“This is the best market we have ever seen for nuclear financing with government tax breaks, loans, surging energy demand and private investment,” says Adam Stein, director of nuclear energy innovation at the Breakthrough Institute, a Washington-based think-tank.
“This is very different to the last nuclear renaissance in the mid-2000s, which was undercut by the fracking boom, no electricity demand growth and then the accident at Fukushima,” he says.
“We now have market conditions for rapid growth in the US nuclear fleet.”
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