Prime Minister Mark Carney and Ontario Premier Doug Ford hold a joint news conference in front of a mock nuclear reactor at the Darlington Energy Complex in Courtice, Ont., in October.Carlos Osorio/Reuters
One question separates announced but purely hypothetical nuclear power plants from those that actually stand a chance of being built: Who’s going to pay for them?
In China and Russia, which dominated reactor construction for the past few decades, governments provided the funds. Advanced economies placed much greater emphasis on private capital. That approach was intended to impose greater commercial discipline and protect the public purse but led to very few reactors being built in the West.
Yet in 2025, Western governments returned to funding nuclear plant constructions. Prime Minister Mark Carney and Ontario Premier Doug Ford stood shoulder-to-shoulder in October before a full-sized replica nuclear reactor used for training, as they committed a combined $3-billion to a new nuclear power station in the early stages of construction in Clarington, Ont., next to the Darlington Nuclear Generating Station.
Within days, this grand gesture paled in comparison with a U.S. government announcement heralding at least US$80-billion in financing to build reactors from Westinghouse Electric Co. on American soil. The Trump administration had apparently already sourced that funding – from the Japanese government.
It’s the kind of commitment the nuclear industry has long needed to turn a surfeit of speculative, early-stage announcements into actual plants.
“Nuclear power is experiencing renewed policy support in many markets,” according to a November report by the International Energy Agency (IEA).
Based on existing policies, the agency predicted solar and wind will continue to greatly increase their share of power generation in advanced economies. But while the IEA predicts both public and private nuclear investment will remain on a much smaller scale, it has already risen more than 70 per cent over the past five years and could meet more than one-tenth of the growing demand for electricity over the next decade.
If nuclear expansion is to be a largely publicly funded enterprise, it will take considerable discipline to avoid the pitfalls that have repeatedly burned taxpayers, utility customers and political sponsors in the past.
Nuclear’s lost decades
Just a short walk from the Darlington small modular reactor site east of Oshawa, Ont., sits the Darlington Nuclear Generating Station, home to Canada’s four largest and newest reactors. Built in the 1980s and early 1990s, they generate more than one-fifth of Ontario’s electricity and are nearing the end of a $12.8-billion midlife overhaul. Each one is capable of generating roughly three times as much electricity as the SMR.
All of Canada’s existing plants were built in a similar fashion, by vertically integrated government-owned monopolies including Ontario Hydro, Hydro-Québec and New Brunswick Power. Costs for constructing and operating them were largely borne by their customers. In Darlington’s case, Ontario Hydro approved its construction in 1977 and an early estimate pegged its cost at $7.4-billion.
By 1993, when the last Darlington unit entered service, a clear pattern had emerged that was to prove the nuclear industry’s undoing: The plant’s cost had surged to $14.5-billion and delivery took an average of five years longer per unit than promised.
Ontario Hydro’s debts ballooned as a result. By the 1990s, politicians complained that the utility spent 40 cents of every dollar earned just to service those debts. The government eventually broke up the utility.
It marked the end of an era. Privatization would introduce competition, officials claimed, which would ensure that electricity was provided safely, reliably and at the lowest cost. Such thinking dominated the industry’s fortunes from the 1990s until recently.
Abandoning its exclusive dedication to building Candu reactors, Ontario began shopping for reactors through competitive bidding processes, culminating in Ontario Power Generation’s order for four reactors from a U.S.-Japanese vendor called GE Vernova Hitachi Nuclear Energy.
The federal government, meanwhile, exited the reactor development business, selling it for a nominal sum to SNC-Lavalin (now AtkinsRéalis Group Inc.). Management of the nation’s main nuclear laboratories, at Chalk River, Ont., was assigned to a private-sector consortium.
Canada wasn’t alone. Since the 1990s, several other developed countries have also sought to greatly increase competition and private ownership in their electricity markets. Reactors increasingly had to compete against alternative power generation technologies to attract private investment – and owing to their heady costs and risk profile, they usually lost.
Hinkley Point C in the United Kingdom is a rare example of a nuclear plant greenlit in this era. In efforts to promote nuclear builds funded by private capital, the U.K. government introduced a financing concept known as contracts for difference, under which private investors paid for construction and could be penalized for missing deadlines. But the plant was guaranteed a specific price for its power, providing certainty for investors.
Financed without direct government funds, Hinkley Point C represents a model that “places all construction risks on investors,” according to academics Jens Weibezahn and Björn Steigerwald in a paper last year on financing nuclear plants in Europe. This model proved difficult to replicate: Rising costs and delays mean “subsequent projects have not found any developers willing or able to secure financing” in the manner Hinkley did.
The project’s overruns also led to backsliding, with the “longstop date” (upon which Hinkley Point C could be cancelled if not completed, a major incentive to keep to schedule) pushed back by three years.
According to a September report on the nuclear industry by Mycle Schneider Consulting, private-sector investment in new reactors remains limited largely to research and development and venture capital. What the private sector hasn’t funded: commercial deployment.
“The private industry is not really interested in building new reactors,” said Tim Judson, a long-time nuclear analyst and activist who wrote the U.S. section for that report.
“It’s only through politically driven decisions by state and federal governments that anything is happening right now.”
Nuclear’s financing quandary
Building nuclear plants is too risky for all but the most risk-tolerant investors. Up-front capital costs are extremely high. A reactor generates no revenue until it’s generating power. Interest charges pile up in the interim so delays hurt a lot. Globally, one in nine nuclear plants is never completed, according to Mycle Schneider Consulting.
Investors have other power generation alternatives. Renewable projects, for instance, offer shorter payback periods, attracting privately funded developers who have eschewed nuclear almost entirely.
In this environment, even large utilities struggle to attract private investors to fund nuclear plants. Aida Cipolla, Ontario Power Generation’s chief financial officer, said her company has “tried many ways” to entice institutional investors to fund the Darlington SMRs, without success.
Traditionally, OPG financed new power stations with debt, she said. And it has done so with the Darlington SMRs. In 2022, the Canada Infrastructure Bank extended a $970-million loan to fund early work. The terms of the loan were never disclosed but almost certainly were more favourable than private-sector alternatives.
Ms. Cipolla added that OPG has worked hard to win equity partners over the years for the four Darlington SMRs. Mr. Carney enthusiastically signed on and the federal government provided $2-billion with an equity purchase through the Canada Growth Fund, established in 2023 to finance projects the private sector won’t touch. The fund’s largest position, representing 13 per cent of its $15-billion grant, is now locked into this high-risk investment.
This approximately $4-billion represents less than one-fifth of the entire planned station, expected to cost nearly $21-billion. Ms. Cipolla said OPG considers the station’s construction to be fully funded and that once the reactors are in service, OPG will recoup its cost from its customers over the operating life of the plant.
U.S. President Donald Trump’s administration has pursued an altogether more aggressive approach in his bid to achieve “energy dominance.”
There are no reactors under construction in the U.S. But in May, Mr. Trump declared that America’s 30-year drought in reactor construction was over: He signed an executive order instructing his energy department to ensure construction begins on 10 new reactors by 2030.
As usual, the question arose: Who will pay for them? The Trump administration’s answer took many by surprise: the Japanese.
It may seem remarkable that Japan, which aggressively curtailed operating its own reactors in the wake of the tsunami-induced Fukushima meltdowns, would pay to build new ones for Americans. But in a statement released during Mr. Trump’s visit to the country in October, the government of new Japanese Prime Minister Sanae Takaichi committed even more than that – up to US$100-billion – to build Westinghouse reactors. And it promised another US$100-billion toward construction of SMRs from GE Vernova Hitachi.
“It’s entirely a departure from how it’s been done in the past,” Mr. Judson said. Under this arrangement, the U.S. government might directly build the nuclear power plant, assuming a role traditionally played by utilities.
“It’s a very strong indicator that nuclear projects are not commercially viable in the private sector.”
Japan’s gesture appears to be part of wider efforts to appease Mr. Trump and reach a trade agreement. In July, Mr. Trump said Japan would spend US$550-billion on projects selected by his government while accepting a 15-per-cent “baseline” tariff on nearly all Japanese goods imported into the U.S.
The Japanese government also emphasized that Japanese suppliers, including Mitsubishi and Toshiba, might be involved in building the U.S. plants.
Whatever the case, this unusual arrangement has divided Western reactor vendors into two distinct categories. The first includes those that have secured massive government backing, such as Westinghouse and GE Vernova Hitachi. The second category is vendors that are still seeking it. AtkinsRéalis, which is developing a large Candu reactor dubbed the Monark it hopes to sell to OPG and Bruce Power in Ontario, finds itself in this latter category.
What hasn’t changed are the risks of spending big on nuclear, which once again will ultimately fall to the Canadian public. Mr. Ford, Mr. Carney or their successors will have to manage all that.
Officials continue to hope that private investors will invest in nuclear. Representatives from the Canada Growth Fund said they expect private investors will buy its stakes once the plant is generating electricity. Similarly, Ms. Cipolla said OPG expects pension plans, mutual funds and other investors will buy equity in the Clarington, Ont., plant upon completion.
“Investment will come when projects are derisked and when projects have a healthy return for investment,” she said.
Editor’s note: A photo caption in a previous version of this article misidentified its subject as the Darlington Energy Complex in Courtice, Ont. It depicted OPG's future headquarters in Oshawa, formerly owned by General Motors of Canada. The image and incorrect caption have been removed.