New Build / Proposed International Nuclear Bank Would Mobilise ‘Massive Amounts Of Capital’ For Reactors

By Kamen Kraev
15 June 2023

Experts planning to launch multilateral body that could help deployment of plants ‘at unprecedented pace’

Proposed International Nuclear Bank Would Mobilise ‘Massive Amounts Of Capital’ For Reactors
Large upfront capital requirements and long project timelines have long plagued the investment potential of the nuclear sector. IBNI may offer a solution to these woes.

Existing financing mechanisms for nuclear energy are tailor-made and not reliable enough to enable a global expansion of nuclear power capacities. In a relatively short period of time, massive amounts of capital will be required for the multiple hundreds of gigawatts of nuclear power capacity globally to meet the world’s ambitious net-zero and sustainability goals, according to a team of international experts calling for the creation of a new multilateral bank to support nuclear new-build.

A proposed International Bank for Nuclear Infrastructure (IBNI) would serve as a multilateral bank that would facilitate the mobilisation of the trillions of dollars of private and public capital into the nuclear sector over the next decades, providing financing, support and expertise to help scale up nuclear power at “a rapid and unprecedented pace”, said Daniel Dean, former investment banker and chairman of the advisory board preparing the project, based in Vienna.

Dean told NucNet that global financial markets are not investing and lending in the nuclear sector as they are in nearly every other asset class. The goal of IBNI will be to work with governments and market actors across project lifecycles to meet the bankability and investability requirements of global financial markets. Helping projects define their conditions for economic equilibrium early on will build investor confidence and enable the “serialisation of repeatable and successful nuclear projects delivered on time and within budget under a similar set of standards across borders,” said Dean.

“For example, IBNI would help drive the nuclear sector toward a de-risked profile where an IBNI-qualified nuclear sector financing would look very similar to any other investment class a pension or insurance fund would readily put their money in today,” he said.

“The bank would progressively make that happen [de-risking] with the appropriate frameworks, transaction structures, standards and criteria. IBNI would enable the increasing crowding-in of cost-efficient market and commercial capital into the nuclear space and enable the demonstration of investable projects that are repeatable and successful across borders.

This is the key to developing market confidence in the nuclear sector, and IBNI would serve in the role as that patient and long-term capital provider and leader that will be ideally situated to enable confidence.”

Multilateral banks are chartered and partly financed by a coalition of countries with similarly aligned long-term global policy goals, such as the rebuilding of Eastern European market economies (EBRD) or eradication of poverty (the World Bank). IBNI’s mission will be far simpler, to help nuclear energy fulfil its needed role as a clean, secure, safe and affordable source of energy in order to attain 2050 net zero goals in a sustainable manner, said Dean

IBNI would need to be set up by a multinational treaty signed amongst its member countries pulling financial resources together to support the rapid scaling of the nuclear sector.

“Unlike the World Bank for example, IBNI will be an infrastructure bank focused solely on nuclear power. It would provide financing and support to economically advanced through developing countries,” said Milton Caplan, IBNI’s advisory board representative from Canada.

Many Financial Institutions ‘Eye Nuclear With Distrust’

According to Caplan, many financial institutions eye nuclear projects with distrust because of factors like project scale, complexity, large capital needs and recent records of delays and cost overruns.

“Many of these financial institutions start off somewhat negative on nuclear projects and one needs to work hard to just to pull them to neutral,” said Caplan. “So, just think about if you had a bank which started understanding that nuclear can be a good investment, and then had the expertise to assess each project on its own merits?”

One typical role of a multilateral financing institution is in conducting a policy dialogue early in the process of preparing large projects, said Milko Kovachev, former infrastructure section head at the International Atomic Energy Agency and IBNI advisory board member in Bulgaria.

“For most cases this is not covered by any existing institutions today when it comes to nuclear power,” said Kovachev, “IBNI will be there to take on that challenge.”

IBNI would be capitalised through a combination of member country governmental, financial markets and private resources. It will have two major financing conduits – a commercial operations arm which would require an estimated $50bn (€46.6bn) of initial government shareholder capital and a separate donor-funded operations arm.

Of the $50bn, approximately $25bn would need to be paid up-front allocated from some 30 shareholder member countries, while the donor fund would require an estimated $5bn of government capital from a subset of seven or more member countries.

David Stearns, a UK-based bank financier on the IBNI advisory board, said the idea behind the bank is not to duplicate or replace state guarantees and other forms of pre-existing support in nuclear projects, but to effectively optimise the financing-related elements of a nuclear project.

“The idea of IBNI is that we maximise public sector value for money with a triple bottom line. First, IBNI must be non-loss-making in order to be sustainable. Second, IBNI must provide additionality, focusing on bridging the gaps between public and private capital. Third, IBNI will crowd in private investment through its quality label and the trust financiers can put in the Bank,” said Stearns. “The bank needs to keep an AAA credit rating, which means it will be an extremely conservative bank, actually.”

IBNI planning documents show that the bank will be aiming to provide both early and long-term financing and support to projects including technology-, country and vendor-neutral new-build, operating life extensions and reactor restarts, nuclear fuel cycle, decommissioning and restructuring of existing projects. The bank will finance and support production and supply chain projects as well as nuclear infrastructure.

Early-stage and mature projects, programmes and industries would be supported by IBNI through a combination of both donor and commercial funding, including financing programmes ranging from competitive grants, concessionary and commercial financing guarantees, climate and sustainability impact financing and equity stake participation.

Bank Would Also Support SMRs, Advanced Reactors and Fusion Technologies

IBNI is also planning to support emerging advanced and modular reactor, fusion and Generation IV technologies, through their commercialsation and scaling, by making available a combination of both donor and commercial operations programmes.

Kovachev said IBNI can be the institution to cover the serial or fleet deployment of small modular reactors, projects which have long lead times. “No institution is supporting serial deployment of this scale at the moment, and IBNI can come as the missing link in that niche,” he said.

The concept of IBNI was born in 2021 out of discussions with parties including many Intentional Atomic Energy Agency member states which are trying to develop new nuclear programmes and developed states trying to finance nuclear projects and most efficiently scale up their nuclear sectors.

The immediate pathway forward includes the establishment of a non-governmental advisory organisation (NGO) that would guide governments and other key stakeholders on the optimal ‘best international practices’ in respect to the near-term implementation of the bank.

It is envisaged that a coalition of about 30 to 50 member countries will come together to establish the bank, said the IBNI team. The NGO is expected to be set up this summer, and will take an additional 18 to 24 months to establish and operationalise the bank.

A key initial milestone to be facilitated by the NGO will be to bring a core group of countries together to sign a joint declaration or memorandum of understanding prior to the COP 28 cliamte conference in Dubai in December. Such announcement could ideally be made during COP 28 as the conference can be the global ‘launching pad forum’ to bring together a larger coalition of supportive countries, said Daniel Dean.

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