POLICY & FINANCE | NUCLEAR INVESTMENT BANK
A nuclear bank for scaling and risk mitigation
The mobilisation of trillions of dollars of global capital necessary for the nuclear sector to scale in the near-term can be supported by a new kind of financial institution – an international multilateral infrastructure bank focused exclusively on nuclear energy
By Daniel Dean, Chairman, IBNI-IO SAG
ATTAINING CURRENT POLICY OBJECTIVES, INCLUDING 2050 Net Zero, will require global nuclear technologies to scale to an unprecedented magnitude and at breakneck speed. This historically unmatched scaling will also require the very rapid mobilisation of multiple trillions of dollars of capital into the sector. Existing nuclear project delivery and financing mechanisms rely mainly on governmental support and attract very limited risk appetite from the global financial markets. Such existing models will be insufficient for catalyzing the very significant quanta of capital necessary required to enable nuclear to scale as quickly as possible to achieve multiple 100s of GW’s of additional global nuclear generation capacity. If the world is going to achieve its ambitious climate, clean energy, energy transition and energy security goals in this short period of time, there simply needs to be a fundamental change in the approach toward financing nuclear infrastructure. Scaling of the nuclear sector faces numerous and multidimensional impediments. These interrelated impediments span a broad spectrum and include among others: public policy; regulatory, markets and ESG frameworks; social license; geopolitical; commercial and
risk allocation models; and perhaps most importantly, affordability and accessibility. Each of the nuclear sector’s impediment is manifested in the form of financial risk. Clearly, the nuclear industry will need to do its part through increased on-time and on-budget performance and other progressive improvements, alongside the key roles of governments, owner-operators, end-users/ratepayers and all other stakeholder groups that will each need to do their part. However, the ‘sum of these parts’ (e.g. what each stakeholder can individually do) does not add up to a solution that will enable nuclear to scale. The mobilisation of the necessary capital required for
nuclear to scale, requires formulation of systemic and multidimensional risk mitigation solutions. The nuclear sector is currently caught in a ‘vicious circle’, whereby nuclear cannot and will not scale without access to a ‘runway’ of cost-efficient capital and such capital is not accessible unless nuclear becomes sufficiently de-risked due to scaling. Nuclear’s ‘vicious circle’ needs to be very rapidly transformed into a ‘virtuous circle’, which will require immediate risk mitigation solutions and unlocking capital flows well before scaling can begin.
A: Today’s ‘Vicious Circle’
High-risk lack of market confidence
B: Future ‘Virtuous Circle’
strong market confidence
De-risked
prevent nuclear scaling
Need to move ‘A’ to ‘B’ as rapidly as possible
Above, figure 1: Illustration of Nuclear Sector’s Transformation from ‘Vicious Circle’ to ‘Virtuous Circle’ Source: IBNI-IO SAG
38 | July 2023 |
www.neimagazine.com
Lack of market capital flows
Strong market capital flows enable nuclear scaling
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