reported<\/a> that Microsoft had agreed with Constellation Energy to restart a nuclear reactor at Three Mile Island, which has been inactive since 2019. This is a good example of the potential \u2018picks and shovels\u2019 that the energy sector can provide to the AI rush.<\/p>\nConstellation Energy will invest US$1.6 billion to revive the shuttered Three Mile Island nuclear plant in Pennsylvania, with the agreement to sell all the output to Microsoft as the tech titan seeks carbon-free electricity for data centres to power the AI boom.<\/p>\n
The decision is representative of the surging interest in uranium as power demand for AI soars, we think. More than a dozen reactors were deactivated over the past decade as competition from cheaper natural gas and renewable energy heated up.<\/p>\n
However, uranium and nuclear energy are now being reconsidered because of the increasing electricity demands fuelled by AI and the global push towards net-zero emissions.<\/p>\n
Nuclear is considered a reliable, low-carbon option, and stronger regulatory support has sparked a renewed interest in nuclear energy.<\/p>\n
Key forces powering the nuclear renaissance – demand<\/p>\n
Firstly, the rising electricity demand to support the vast energy needs of the AI boom has been a significant factor in the revival of nuclear energy. According to a report by the International Energy Agency in late 2024, global electricity demand is projected to surge through 2025 and beyond, led by emerging economies such as China and India. This increase is fuelled by trends such as AI, electric vehicles, cryptocurrency, and the growing impact of heatwaves.<\/p>\n
![\"Source:](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2025\/10\/vaneck1.jpg\")
<\/p>\n
Source: Goldman Sachs; (via Masanet et. al, 2020, IEA, Cisco and Goldman Sachs Global Investment Research), 2024. For illustrative purposes only.
\nKey forces powering the nuclear renaissance \u2013 low carbon output<\/p>\n
In addition, nuclear energy is known to be a reliable, clean energy source. Global efforts to reduce greenhouse gas emissions by building out renewable energy capacity have, by many accounts, fallen behind schedule. This has raised the profile of existing nuclear facilities and new construction as important components of the global energy transition.<\/p>\n
Uranium-powered nuclear energy has lower emissions compared to some renewable energy sources, and there are no limits on when nuclear facilities can generate power. Unlike wind and solar energy, which face the hurdles of calm winds and dark skies, nuclear can provide consistent and reliable power.<\/p>\n
![\"Source:](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2025\/10\/1761549011_360_vaneck1.jpg\")
<\/p>\n
Source: World Nuclear Association, Intergovernmental Panel on Climate Change. For illustrative purposes only. Based on total lifecycle emissions, June 2025. For illustrative purposes only.
\nKey forces powering the uranium renaissance – regulatory<\/p>\n
Uranium-powered nuclear energy used to be shunned by governments and environmentalists. The fear of nuclear accidents was a key deterrent to countries exploring this source of energy. Additionally, operating a nuclear plant is expensive without government subsidies.<\/p>\n
However, in recent times, there has been increased regulatory support from many governments. Many have reversed their stance or affirmed their commitment, recognising the critical importance of nuclear energy in the power mix.<\/p>\n
For example, the US has reversed course by choosing to extend the life of several nuclear power plants that were set to be decommissioned. Recently, the US Nuclear Regulatory Commission renewed the operating licenses at the North Anna Power Plant in Virginia, extending their operating lifetime by 20 years to nearly 2060. This trend is evident in many regions of the US.<\/p>\n
More surprisingly, in the US, in the run-up to last year\u2019s Presidential election, both nominees ran pro-nuclear campaigns. Notably, the Biden Administration released a roadmap to deploy 200 additional gigawatts of nuclear energy capacity by 2050.<\/p>\n
Since winning, President Trump has issued a series of executive orders aimed at quadrupling US nuclear capacity to 400 GW by 2050 from approximately 100 GW today. His executive orders also focused on expediting nuclear licensing by placing time limits on the Nuclear Regulatory Commission\u2019s licensing review process. His orders also seek to address America\u2019s lack of domestic uranium enrichment and processing capability. The US and much of the world have become dependent on a select few countries, namely Russia, for enriched uranium.<\/p>\n
These executive orders supported the nuclear energy ecosystem, providing investor confidence across the supply chain and raising the prospects of increased investment in nuclear capacity across the board.<\/p>\n
In Japan, despite the Fukushima disaster being fresh in their collective memory, Japanese leaders have begun taking steps toward expanding nuclear capacity. In late August, Prime Minister Fumio Kishida announced plans to hold a ministerial meeting to discuss measures needed to restart existing reactors at a Tokyo Electric Power Company facility.<\/p>\n
Other countries that have begun to show support include China, Switzerland, India and Norway.<\/p>\n
We think this is an opportunity for investors.<\/p>\n
Access the opportunity: Comprehensive exposure with a focus on nuclear utilities <\/p>\n
VanEck will launch its Uranium and Energy Innovation ETF (URAN) on ASX. URAN will track the MarketVector\u2122 Global Uranium and Nuclear Energy Infrastructure Index, and it will provide investors access to the growing global demand for low-carbon energy.<\/p>\n
We think uranium will continue to provide the \u2018picks and shovels\u2019 of the growth of AI and the digital economy. We also wonder if a sports team will be named for this era. Is there a nickname for the participants of the \u2018AI rush\u2019?<\/p>\n
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