Energy transition

Nuclear

Firm, low-carbon baseload and the most capital-intensive infrastructure there is. An enormous up-front capex and a long build, then decades of near-constant output at a very high capacity factor, sold under a long contract (a CfD, a RAB, a regulated tariff or a long PPA) that removes price risk and makes the capex financeable. The risk is construction cost overruns. Six real projects below take the story through the technology, the model and a working returns model.

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In focus · —
Example

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Drag the sliders to see what earns the money: the plant's capacity, the contracted price on every MWh, and the very high, steady capacity factor, all set against an enormous capex.

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Capacity
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Generation
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Generation revenue
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contracted revenue p.a.
EBITDA p.a.
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01

What it is & how it works

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How it earns

Model A · the contracted megaproject

A long contract that finances a vast capex

Nuclear is firm baseload, a generator that, once built, produces near-constant low-carbon power for decades at a very high capacity factor. What sets it apart is capital intensity: the up-front capex is the largest in infrastructure (often £6–9m per MW), spent over a long, risky construction. What makes that capex financeable is the contract: a Contract for Difference (CfD), a Regulated Asset Base (RAB), a regulated cost-of-service tariff, or a long power-purchase agreement that fixes (and usually indexes) the price for decades and so removes wholesale price risk. The return therefore rests on the contracted price on near-constant output, set against the capex and the cost of capital the contract unlocks. Fuel is cheap per MWh; the running cost is mostly fixed O&M. The risk hanging over the asset class is construction cost overruns, the gap between a budgeted megaproject and a delivered one.

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03

What it costs, and how it's financed

Revenue → operating costs → EBITDAMargin —

The capital · reactors + build
Financingallocation

    History & framework · key milestones
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      Cash flows & returns

      Build & contributions

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      Contract & tax

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      Financing & hold

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      Unlevered IRR
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      asset / project return
      Levered IRR
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      return to equity
      Equity multiple
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      MOIC over hold
      Payback
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      project, undiscounted
      Cash-flow profile, equity■ invested   ■ returned
      Show the year-by-year schedule
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      What drives the return

        See also the Nuclear plant simulator, where you build and run a reactor, and the Cash-flow & DCF model.