Ali Ahmad & Nadira Barkatullah
Traditionally, governments have used domestic public sector funds to finance nuclear power projects. However, a recent trend shows that governments, world-wide, are increasingly looking towards the private sector for new financing approaches with different risk and ownership structures that mitigate target risk mitigation, and new contractual arrangements that aim to lower the fiscal burden associated with nuclear power projects.
In this article in Energy Strategy Reviews, MENACS energy security expert Ali Ahmad and former IAEA senior economist Nadira Barkatullah give an overview of the major challenges related to financing nuclear power plants, such as the high upfront capital cost, sensitivity to interest rate and long construction time. The paper then discuses existing and emerging financing strategies and contractual arrangements for both, government and private investors. The analysis eventually evaluates the potential of the emerging financing approaches to resolve some of the challenges associated with the deployment of nuclear power but there is no one-answer, as each project is unique and requires careful review regarding the applicability of the financing model, as some of these approaches may have their own challenges.