Nuclear Energy’s Comeback in the UK and Europe
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“Defoes goes past the headlines to show how the UK’s Sizewell C model, Europe’s green‑taxonomy rulings and a new push on small modular reactors are quietly turning nuclear from a legacy controversy into a codified, financeable pillar of Europe’s low‑carbon power mix.”
Nuclear energy is back at the centre of Europe’s decarbonisation and energy‑security strategy, and the UK is turning that policy pivot into concrete projects. Britain’s decision in 2025 to give a final investment green light to the 38‑billion‑pound Sizewell C project — with financing now fully confirmed — marks the largest UK nuclear build in a generation and a clear signal that nuclear is being treated as critical long‑term infrastructure. In parallel, the European Union has locked in a framework that allows nuclear projects, under strict conditions, to be labelled as environmentally sustainable investments, after the EU General Court rejected Austria’s attempt to overturn nuclear’s inclusion in the bloc’s green taxonomy. Taken together, Defoes’ stance is bullish: nuclear is moving from policy rhetoric to bankable reality, with the UK and EU reshaping the financing terms that determine whether capital follows.
The UK is the clearest case study of this shift from talk to action. Following years of debate, the government and a consortium of investors — including EDF, Centrica, Canadian pension fund La Caisse and Amber Infrastructure — have agreed a funding structure for Sizewell C that leaves the state as the largest shareholder and spreads construction risk via regulated charges on consumer bills. The project has raised about 5.5 billion pounds in debt through export‑credit facilities and working‑capital lines on top of its equity raise, allowing it to move into full‑scale construction. Officials argue that once operational, Sizewell C could supply low‑carbon electricity to around six million homes and save the system roughly 2 billion pounds a year compared with alternative low‑carbon technologies, with an agreed strike‑price range in the mid‑double‑digits per megawatt‑hour over its 60‑year life. This is not cheap energy, and the UK’s National Audit Office has warned of bill impacts of up to 19 pounds per year by the time the plant is running, but the financing model insulates investors from cost overruns and is explicitly designed to crowd in long‑term institutional capital.
On the continental side, the EU has given nuclear a durable regulatory anchor in its sustainable‑finance taxonomy. The Commission’s Complementary Climate Delegated Act, effective since 2023, allows certain nuclear activities to be classified as environmentally sustainable, provided they meet demanding criteria on waste management, safety and technology standards, including a requirement that existing and new reactors use accident‑tolerant fuel from 2025 once approved by national regulators. In 2025, the EU General Court confirmed that the Commission was within its powers to include nuclear and gas as “transitional” activities that can contribute substantially to climate mitigation and adaptation, rejecting Austria’s challenge and confirming that nuclear can remain in the taxonomy framework. The court explicitly noted that nuclear generation has near‑zero greenhouse‑gas emissions at point of production and that, at scale, there are currently no technologically and economically feasible low‑carbon alternatives for certain system roles. For investors, taxonomy‑aligned labelling does not remove political risk, but it does clarify that nuclear projects can sit within many ESG‑mandated portfolios when they meet the criteria.
The third leg of the comeback story is small modular reactors (SMRs). In the UK, the government has shortlisted four SMR technology providers, with decisions on which designs to back now scheduled for the spring of 2025, alongside key milestones for Sizewell C’s financing. The plan is to select at least two technologies for fleet‑style deployment, with procurement processes expected to begin in 2025 and contracts targeted for 2026, signalling an intent to standardise and replicate rather than treat each plant as a one‑off megaproject. At EU level, the European Industrial Alliance on SMRs adopted its first Strategic Action Plan in 2025, setting out a detailed five‑year roadmap to move SMR designs from development through demonstration into early‑2030s deployment across Europe. The Commission has also launched a dedicated call for evidence to shape a forthcoming SMR strategy, due in the first half of 2026, with a stated aim of accelerating SMR rollout in the next decade. These initiatives do not guarantee a smooth path — licensing, supply‑chain capacity and cost discipline remain open questions — but they signal political intent to make SMRs part of Europe’s medium‑term capacity mix.
The bear case on nuclear is well understood and should not be minimised. Large new‑build projects carry construction‑risk, schedule‑risk and political‑risk profiles that can stretch far beyond typical infrastructure assets, as past European and UK experiences illustrate. Public opposition remains strong in several member states; Austria’s legal challenge to nuclear in the taxonomy, though unsuccessful, underlines that a portion of the European political class views nuclear as incompatible with sustainable finance. Cost‑of‑living pressures also sharpen scrutiny of any project that raises consumer bills in the short term, especially when benefits are back‑loaded. For SMRs, there is still no fully commercial, Western deployment track record at scale; timelines set out by both the UK and EU are ambitious and contingent on regulatory approval and global component supply chains.
From a Defoes perspective, however, the balance of structural forces points to a measured but real nuclear revival in the UK and parts of Europe. High and volatile gas prices, the retirement of coal and ageing nuclear fleets, and binding decarbonisation targets leave policymakers with few options for firm, low‑carbon capacity that can operate at scale. The UK’s decision to socialise some of the construction risk for Sizewell C and the EU’s choice to keep nuclear within its sustainable‑finance taxonomy are not one‑off quirks; they are policy choices that make nuclear more financeable over multi‑decade horizons. The bullish stance is not that every nuclear project will succeed, but that in jurisdictions where financing models, regulatory frameworks and industrial strategies are being redesigned around long‑term decarbonisation, nuclear is re‑emerging as a credible, increasingly codified pillar of the power mix rather than a legacy technology fading quietly into the past.