Could VC investment in nuclear power be part of the solution to the energy crisis?

Stockholm-based Norrsken VC's Investment Manager Inês Rocha outlines the current state of nuclear energy and why EU-based investors would be wise to take advantage of imminent growth in this sector. 
Could VC investment in nuclear power be part of the solution to the energy crisis?

Nuclear power is undergoing a resurgence of interest in response to changes in the current climate – both political and literal. 

The climate emergency is having grave effects across the globe, and in recent months, the hostilities involving Russia and Ukraine have shone a light on the rest of the world’s reliance on Russian energy. Now more than ever, there is a pressing need and desire to rebuild Europe’s once interdependent oil and natural gas economy, reduce reliance on Russia, and increase the use of sustainable energy. 

As we transition towards longer-term renewable energy sources, nuclear technology is now viewed as an increasingly powerful solution in combating the climate emergency. What was once an emotionally polarising technology has the current climate institutions, the public, and investors reconsidering their attitudes.  

Transition: nuclear could be a “transitional” and environmentally sustainable activity

Whilst nuclear is often referred to as ‘clean’ energy, due to an absence of CO2 or other greenhouse gas emissions in its production, it is only considered part of a broader solution of renewable energy generation. 

At the beginning of 2022, the European Commission adopted a Complementary Climate Delegated Act (CCDA), in which nuclear energy was listed as a transitional environmentally sustainable activity under the EU Taxonomy, governed by regulations that define sustainable activities. All nuclear activities must comply with strict safeguarding criteria, but labeling it as ‘transitional’, signals that attitudes are shifting and there is a pragmatism in the journey towards net zero emissions.

Following an in-depth technical assessment, the Commission concluded that “the analysis did not reveal any science-based evidence that nuclear energy does more harm to human health or to the environment than other electricity production technologies already included in the Taxonomy as activities supporting climate change mitigation.” 

EU member states still retain the right to scrutinise or even object to the CCDA before its implementation. However, the act benefits from strong legislative support; with EU Parliament backing and increasing support from the public. The International Atomic Energy Agency has found that nearly 50% of European citizens approve of nuclear power, therefore it is likely that the CCDA will be implemented in 2023. 

This act will pave the way for nuclear investments to be greenlit as ‘environmentally sustainable', so long as they comply with stipulated conditions. This creates huge opportunities for green investors, alongside designated public funds. 

Better Technology: fission and fusion have leapt forward 

This change in policy unlocks the potential to build on the technologies from which the next generation of nuclear power will benefit. Already, there have been huge developments in the field of nuclear fission and nuclear fusion, including how we build small modular reactors. 

The future of nuclear fission – the technology that splits nuclear atoms to generate enormous amounts of power – now involves reactors that are designed to use less waste, are highly automated and built to be inherently safe. These are reactors that are designed to shut down to a safe state by harnessing the laws of physics, rather than requiring the intervention of a plant operator. They are smaller, designed with mass manufacture in mind, and can be installed safely underground. 

The future of nuclear fusion – the merging of atoms to generate power – is an area of technological development that is of particular interest. Fusion harnesses the energy of the sun, and fuel is widely available and nearly inexhaustible via a type of reactor that is inherently safe by design; by contrast, it generates no long-lived radioactive waste and is sustainable due to the lack of greenhouse emissions.

Investment: $3.4 billion of investment in 2021… and growing

Due to the huge potential of nuclear energy in the coming years, investors have identified some exciting prospects. Bloomberg highlights a $3.4 billion investment of venture funding for startups that specialise in nuclear energy in 2021 alone, and Rystad Energy predicts that a projected $91 billion will be invested in the sector before the end of next year, following the growth of fission and fusion technologies. 

Outside of established nuclear economies in the US and Europe, developing nations such as India and China are building their own plants, which has caused tech giants to respond by pouring resources into next-generation nuclear starts worldwide.

Even tech heavyweights are demonstrating their commitment to nuclear technology. There are notable investments from the likes of Bill Gates, Jeff Bezos, and Peter Thiel, as well as very public declarations in favour of nuclear energy from electric car giant, Elon Musk, who views it as essential to nuclear security; and calls from venture capitalist, Marc Andreessen, for 1,000 new plants to be constructed. 

What next? More investment interest from European investors! 

As such, nuclear power has experienced conditions favourable to its growth, wider adoption, and greater investment. EU-based investors could greatly benefit from following their US counterparts and take advantage of imminent growth in this sector. 

In 2022 and beyond, nuclear technology benefits from increased safety and reduced risks, which investors can use to their advantage when banking on fission and fusion as the energy sources of the future. By harnessing the potential of this nuclear energy, we can slow the climate emergency and move closer towards net zero – a gain for both investors and humanity.

Follow the developments in the technology world. What would you like us to deliver to you?
Your subscription registration has been successfully created.