Nuclear power: The reliable solution for modern energy demands

Lessons from the past: Cost overruns and stagnant demand

The initial optimism surrounding nuclear power in the mid-20th century gradually faded as nuclear technology became increasingly associated with nuclear weapons programs, high-profile accidents, and persistent cost overruns. During the 1960s and 1970s, these concerns contributed to growing public skepticism and mounting financial challenges for the industry.

By the time the Three Mile Island Unit 2 accident occurred, the financial viability of nuclear energy had already declined sharply. Utilities were placing fewer new orders for reactors, and cancellations were on the rise. This downturn was exacerbated by flat demand for electricity, an uncertain national economy, elevated interest rates, and a significant increase in construction timelines for nuclear plants.

In the early 2000s, the U.S. Government began to take the first meaningful steps in more than a decade toward support of nuclear development. In 2005, Congress created the Department of Energy’s Loan Program Office (LPO) and empowered with new major lending authority that would ultimately issue loans for the construction of Vogtle Units 3 & 4. The U.S. loans helped the Vogtle construction weather the cost overruns, design issues, and delays that plagued the project. The Vogtle units came online in 2023 and 2024 respectively. In 2007, the federally owned Tennessee Valley Authority elected to complete construction on the partially built Watts Bar Unit 2 after a 22-year construction hiatus. The plant began operation in 2016. Combined these three units added nearly 3,400G megawatts electric to the U.S. power grid. All said the U.S. reactor fleet of over ninety plants provide roughly 20 percent of the United States’s total power production.

Government investment, data centers and nuclear’s reliability renaissance

The U.S. government support ramped up over the 2010s and 2020s with billions of dollars of federal funding going to developers, laboratories, and connective infrastructure. The government announced or paid out over $3 billion in investment in multiple advanced reactor developers under the Small Modular Reactor (SMR) Licensing Technical Support Program, the Advanced Reactor Demonstration Program, Project PELE, among others.

Upon regaining office, President Trump made nuclear energy a priority. In May 2025, he issued four executive orders wherein he recommitted the government to the support of nuclear technology, ordered the elimination of bureaucratic obstacles, and encouraged the use of long moribund authorities to demonstrate advanced reactors. He recognized in these executive orders that without decisive action and creative approaches, the advanced reactor community was unlikely to progress from design to construction. He also made nuclear a key component of the country's Artificial Intelligence (AI) Action Plan.

The importance of AI’s energy demands is critical in understanding nuclear energy’s resurgence. Data centers powering artificial intelligence and cloud computing require enormous, uninterrupted power to operate and cool servers. Technology companies have recognized that intermittent sources like solar and wind cannot meet these demands alone. Even when paired with battery backup, intermittent sources struggle to meet the demands of the larger hyperscale data centers which may require 100 megawatts or more. ² Nuclear power, with its large-scale output and “always-on” capability, is increasingly seen as the solution for grid-scale, mission-critical infrastructure to power these energy hungry data centers.

The data center industry’s demand has had an immediate impact on the nuclear market. Due to the need for this industry, previously closed nuclear power plants are now being retrofitted and upgraded for restart—including Three Mile Island Unit 1, Palisades Nuclear Generating Station, and Duane Arnold Energy Center.

Additionally, the partially completed V.C. Summer Units 2 and 3 are now slated for completion through a partnership between the utility and Brookfield.

Microsoft’s recent twenty-year power purchase agreement (PPA) at Three Mile Island epitomizes this trend. The PPA aims to restart the idle Unit 1 reactor exclusively for data-center operations. This deal will supply reliable energy equivalent to the consumption of ~800,000 homes. In addition to Microsoft, AWS, Meta, and Open AI have all made major investments in nuclear-powered campuses, leveraging the technology’s ability to provide firm, scalable electricity. For lawyers, these developments mean new types of contracts and risk allocations, focused on long-term reliability and operational certainty.

In addition to this, numerous new reactors are being proposed across the country. The Department of Energy has announced eleven projects under its authorities to be completed both on and off federal land. Meanwhile, the Department of War recently announced that it would select eight bases to host potentially eleven reactors. Each of these projects will involve significant construction of both the nuclear and energy islands as well as likely grid interconnection.³

Policy landscape: United States vs. China

It is impossible to fully understand the buildout of AI infrastructure including nuclear reactor deployment without understanding the current global competition between the United States and the People’s Republic of China. President Trump’s team introduced their AI Action Plan with the following declarations:

• The United States is in a race to achieve global dominance in AI. Whoever has the largest AI ecosystem will set global AI standards and reap broad economic and military benefits. Just like we won the space race, it is imperative that the United States and its allies win this race.⁴

As discussed above, the administration has taken unprecedented steps in opening federal lands and encouraging nuclear development to meet these objectives. In addition to the eleven reactors that it has announced, the U.S. Energy Department (DOE) has announced four of its sites will host interested data-center developers.⁵

These efforts by the U.S. government are in large part an attempt to catch up with the unprecedented buildout by the People’s Republic of China which is in the midst of an unabated nuclear and data-center boom.

China views nuclear energy as critical to meeting surging electricity demand and cutting air pollution from coal which along with other fossil fuel sources constituted 62% of Chinese energy production in 2025.⁶ By the end of 2024, China had seventy-eight nuclear reactors either operating or under construction, totaling about 53.2 GW generating capacity and another 23.7 GW under construction.⁷ Dozens of new reactors are in the pipeline: in April 2025 alone, China approved ten additional reactors across multiple sites (a ~$27 billion investment) as part of its five-year plan.⁸

How can China build so quickly and (comparatively) cheaply?

The answer lies in its state-driven model. With centralized planning, standardized designs, and strong government financing, China achieves economies of scale. Reactors are built in about five years at ~$2.7 billion each, far less time and cost than Western projects (compare: the UK’s Hinkley Point C is projected at $63+ billion for two units, and the U.S. Vogtle project reached ~$35 billion). China has indigenized modern reactor technology (its “Hualong One” design) and manufactures most components domestically, avoiding foreign supply bottlenecks.

China also leads in advanced reactor tech: it connected the world’s first Gen IV high-temperature gas-cooled reactor to the grid in 2021, is building demonstration SMRs (the Linglong One, due 2026), and is researching thorium-fueled reactors and even fusion hybrids. On safety, Chinese plants have strong performance metrics so far, and the government carefully sites reactors in low-seismic zones.

For lawyers watching global trends, China’s approach highlights alternative contracting and risk models. Many new Chinese reactors are turnkey projects by state-owned firms, a stark contrast to the multi-party, heavily negotiated projects in the West. Further, China is aggressively exporting nuclear technology, offering to finance and build plants in other countries. Legal practitioners might encounter Chinese state-owned enterprises as partners or competitors in international nuclear bids. Issues of export controls, technology transfer, and cross-border liability loom large here—for example, Chinese reactor deals bring into play international frameworks like the IAEA standards and U.S. or EU export control laws if any Western tech is involved.

In summary, China’s nuclear surge underscores the gap that U.S. and European projects must close. It could drive competitive pressure and innovation but also requires Western lawyers to be adept in international nuclear law, from cross-border joint ventures to nuclear trade regulations.

Conclusion

Nuclear power’s journey from a mid-20th-century “too cheap to meter” promise, through decades of stagnation, and now into a 21st-century revival is a remarkable turnaround. For lawyers in construction and disputes, this means exciting opportunities—and significant responsibilities. Projects on the horizon, from reanimated old plants to cutting-edge SMRs, will test the limits of engineering and law alike, and shape an energy future where nuclear technology will help power the next computing revolution.

Hogan Lovells is a global elite law firm known for helping its clients navigate highly regulated industries. Our Construction & Engineering lawyers work with our Energy Regulatory practice to support the development of nuclear projects that are on time, on budget, and have public trust.

Authored by Alvin Lindsay, Partner and co-lead of Construction and Engineering group, and Stewart Forbes, Counsel in energy regulatory practice group.