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The nuclear power industry in 2025 is undergoing a renaissance, fueled by the urgent need for reliable energy to meet growing demands from sectors like AI and data centers. Global electricity demand from data centers is now forecast by the IEA to double by 2026, reaching more than 1,000 TWh; nearly the annual demand of Japan. AI training clusters alone are driving multi-gigawatt load pockets that utilities cannot meet with conventional resources. But this resurgence is not without its challenges. Legal and regulatory hurdles remain significant barriers to nuclear energy expansion, even as companies and governments work to overcome them.
The Legal Landscape
Nuclear power projects face a complex web of regulations at both the federal and state levels. The U.S. Nuclear Regulatory Commission (NRC), while essential for ensuring safety, has faced criticism for its slow and costly licensing processes. Historically, a combined license (COL) has taken 5–8 years, and the NRC's environmental reviews for advanced reactors still average 2+ years, despite statutory pressure to shorten them. For instance, complying with the National Environmental Policy Act often causes delays due to lengthy environmental impact assessments. On top of that, some states, like Minnesota, have maintained bans on new nuclear plants, further complicating expansion efforts. Other states, such as California, have reversed prior phase-outs (extending Diablo Canyon), highlighting political inconsistency as another risk factor for investors.
Baker Botts has global energy regulatory and project development teams with deep U.S. experience helping nuclear developers navigate NRC and FERC requirements, as well as securing Department of Energy financing for next-generation projects.
Globally, the U.S. is contending with countries such as China and India, where nuclear plants are being developed more quickly under fewer constraints. China currently has 27 reactors under construction, more than the rest of the world combined and has reduced its average construction timeline to ~7 years for Gen-III units. India, South Korea, and the UAE are also accelerating new build programs. To stay competitive internationally, American agencies and businesses are pushing for greater efficiency in the approval process.
Industry Actions
In response, the U.S. government has introduced measures to streamline regulations. The ADVANCE Act, passed in 2024, requires the NRC to prioritize efficiency and lower fees to facilitate the deployment of advanced reactors. It also directs the NRC to create a new "risk-informed, technology-inclusive" regulatory framework by 2027, a major shift for SMR and microreactor developers. Executive orders issued in 2025 have also given more authority to the Department of Energy and the Department of Defense to speed up reactor design reviews. The DOD, under its "PEO, Strategic Capabilities Office," is already pursuing microreactor pilots under Project Pele, expected online by 2026.
At the same time, major tech companies are investing heavily in nuclear projects to power their energy-intensive operations, including backing the development of small modular reactors (SMRs).
Coping with Challenges
Despite these efforts, significant obstacles remain. Some worry that accelerating regulatory processes could compromise safety standards. The high capital costs of nuclear projects and supply chain constraints, including the limited availability of enriched uranium, also pose ongoing risks. Only one U.S. company, Centrus, currently produces HALEU (High-Assay Low-Enriched Uranium), and supply shortages are a critical bottleneck for most advanced reactor designs. Costs have also escalated: the only recent U.S. new-build project, Vogtle Units 3 & 4, ultimately cost more than $30 billion, far exceeding initial projections.
To mitigate these issues, companies are exploring innovative solutions. Partnerships between tech companies and nuclear developers are creating new funding strategies and technological advances. State-level initiatives, such as Tennessee's efforts to support SMR siting, are also key in driving progress. Wyoming and Alaska are also moving quickly, with TerraPower and Oklo advancing FOAK deployments that pair reactors with industrial loads like data centers, hydrogen hubs, and mining operations.
The Future
The path forward for nuclear power in 2025 and beyond hinges on balancing rigorous regulations with operational efficiency. Nuclear is emerging as the only scalable, dispatchable, zero-carbon option capable of supporting hyperscale compute loads. Adopting a regulatory-first approach will help to keep projects on track. Encouraging collaboration between the public and private sectors will be crucial to making nuclear energy a viable solution for the country's growing power needs.
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