Trump's "Nuclear Dream" is not favored by many

The Trump administration is attempting to ensure that the United States maintains a leading position in the artificial intelligence (AI) race through an aggressive nuclear energy expansion plan. However, despite the White House's ambitious goal of quadrupling the nation's nuclear power capacity by 2050, market experts and industry insiders have expressed widespread skepticism about the feasibility of this vision due to high construction costs, regulatory challenges, and concerns from the private sector about financial risks.

Recent developments indicate that the Trump administration has identified nuclear energy as a key solution to the electricity gap for AI data centers. The government signed an $80 billion partnership with private equity giant Brookfield and reactor designer Westinghouse in October 2024, planning to build eight large nuclear power plants. At the same time, the government is promoting the restart of several decommissioned nuclear power plants, including the Palisades in Michigan and Three Mile Island in Pennsylvania, by providing billions of dollars in loans.

This strategy has received initial responses from Silicon Valley tech giants, with Microsoft, Google, and Amazon signing long-term power purchase agreements or investing in small modular reactors (SMRs). However, in terms of market impact, investors remain cautious. Edwin Lyman, a physicist at the Union of Concerned Scientists, warned that the fundamental economic logic of nuclear power has not changed, and its costs remain higher than other energy sources; Trump's "nuclear revival" resembles a "house of cards."

The current nuclear power boom is largely driven by the electricity demand brought about by the return of data centers and manufacturing. Clay Sell, CEO of X-energy, stated that the U.S. would not be able to defeat China in the AI race without nuclear power assistance. However, while restarting old power plants is seen as a cheap way to increase grid capacity, only a few of the decommissioned plants in the U.S. are in a position to be restarted.

Out-of-Control Costs and the "Vogtle Legacy"

The historical record of large-scale nuclear power construction has deterred investors. According to a report released by T. Rowe Price, to achieve a fourfold increase in capacity by 2050, the U.S. would need to add 15 gigawatts (GW) of installed capacity annually starting in 2030, a pace that would exceed the historical peak set in 1974. The report emphasizes that "cost and financing" are the greatest threats to the expansion plan.

As a cautionary tale, the Vogtle units 3 and 4 in Georgia only began operations in 2023 and 2024, having been delayed by seven years and exceeding their budget by $18 billion. Their construction costs soared to $15,000 per kilowatt, about five times that of South Korean nuclear projects and significantly higher than in India.

The massive losses led Westinghouse to file for bankruptcy protection in 2017. Duke Energy CEO Harry Sideris clearly stated that utility companies find it difficult to invest heavily without federal government cost overrun insurance or protective measures.

Brookfield Transactions and National Intervention

To resolve financing difficulties, the Trump administration attempted to introduce a new cooperative model. Secretary of Commerce Wilbur Ross promoted an $8 billion deal with Brookfield, which includes a special clause: the Japanese government commits to allocate up to $100 billion from its $55 billion investment fund to support reactor construction.

The plan also includes a profit-sharing mechanism and even allows the government to hold shares in Westinghouse. Carl Coe, Chief of Staff at the Department of Energy, previously hinted that under a "national emergency," the government might directly purchase and operate nuclear power plants. Santee Cooper CEO Jimmy Staton pointed out that this new model shifts risks from utility companies to private equity and the government.

However, Jefferies analyst Julien Dumoulin-Smith questioned, given the public's heightened concern over the affordability of electricity, whether data center operators would be willing to underwrite these massive investments without a government backstop remains uncertain.

SMR Technology and Regulatory Game

In addition to large units, the Trump administration is pinning hopes on small modular reactors (SMRs) to lower the initial capital threshold. Startups like Oklo and NuScale have received substantial venture capital and signed agreements with AI companies. However, currently, no SMR in the United States has obtained an operating license from the U.S. Nuclear Regulatory Commission (NRC).

To expedite progress, the Trump administration is pushing for regulatory rollbacks. This has sparked a strong backlash within the regulatory community. Former NRC Chair Allison Macfarlane expressed concerns about this "political interference in independent regulation," arguing that cutting regulatory budgets or changing processes would significantly increase the risk of accidents. She stated that considering the construction cycle and high costs, the goal of quadrupling by 2050 is "absolutely unattainable."

Despite the ongoing skepticism, Adam Stein, Director of Nuclear Innovation at the Breakthrough Institute, believes that the current government subsidies, loan support, and surging energy demand have created an unprecedented financing environment, which is starkly different from the "nuclear renaissance" that was ended by the shale gas revolution in the mid-2000s