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Alumni Media

The US can reduce Russia’s nuclear energy—and geopolitical—influence

By Marina Lorenzini, Research Program Coordinator at the Middle East Initiative at the Belfer Center for Science and International Affairs and Fletcher Alum

As the second Donald Trump administration settles in, at least one energy priority will remain consistent: bipartisan efforts to position the US nuclear energy industry for a greater share in the global marketplace. In early February, Secretary Chris Wright emphasized Trump’s priority for the United States: to “lead the commercialization of affordable and abundant nuclear energy” amid surging global energy demand. This opportunity will lead not only to economic growth and improved energy security in the United States, but also the chance to reduce Russian influence on nuclear energy markets in Europe—and the geopolitical leverage it affords.

For the past two decades, Russia has wielded its nuclear energy technologies—through its state-owned conglomerate Rosatom—as a strategic export to exert geopolitical leverage. Rosatom has been a dependable, cost-effective, and technically competent partner for stakeholders around the world, enabling its dominant market position.

Substantial up-front project finance and loans have contributed to Rosatom’s international success. BangladeshBelarusEgyptHungary, and Turkey have benefitted from multibillion-dollar loans from Russia’s State Bank for Development and Foreign Economic Affairs (Vnesheconombank). State sponsorship allows Rosatom to offer favorable loan terms—such as a 3 percent interest rate—that competitors cannot match. Meanwhile, any analogous form of concessional loans for infrastructure projects has not been a part of the development strategy among Rosatom’s competitors.

However, some countries that previously embraced the vision of energy integration with Russia continue to shift investments away from Russian partners. Countries tied to Rosatom for their nuclear supplies are keen to diversify—if not extract themselves entirely—from energy dependence on Russia. Additionally, Vnesheconombank‘s SWIFT ban and US sanctions designation increases risks for loan recipients.

The United States—and allies with nuclear industries such as France and South Korea—could further convert the commercial interest for non-Russian products into strategic wins by focusing on countries with Soviet-era reactors. Countries and utilities often cite project finance as the primary barrier for building, but the new political momentum in the United States could galvanize both sufficient funds and new models across the public and private sectors.

Bulgaria seeks two new reactors at Soviet-era site

Bulgaria’s Kozloduy nuclear power plant operates two Soviet-era VVER-1000 reactors which supply one third of the country’s electricity. But in February 2024, Bulgaria signed an intergovernmental agreement with the United States to contribute to Bulgaria’s civil nuclear program, including the design, construction, and commissioning of two Westinghouse AP-1000 reactors at Kozloduy at a cost of $14 billion. Bulgaria’s energy minister said that the two reactors will be built entirely with public funds: either the Bulgarian treasury or the state plant owner will finance up to 30 percent of the project costs, and a loan will cover the remaining costs.

In early February, the Bulgarian energy minister met with officials from the US Export-Import Bank (EXIM) to advance a $8.6 billion (more than 60 percent of the estimated cost) letter of interest for the two new reactors. For the remaining amount, the Bulgarian treasury or Kozloduy’s owner has several options. Bulgaria may also have access to debt or equity financing from the world’s largest multilateral development lender, the European Investment Bank. Additionally, as the World Bank considers how to incorporate nuclear power into their offerings, any steps toward engagement would encourage other lenders to do the same. If further capital is required, Bulgaria—with its relatively healthy domestic economy—could issue dollar-denominated bonds to raise funds, or the Kozloduy owner could issue green bonds similar to Canada’s Bruce Power.

Bulgaria’s ability—and that of any potential lenders—to overcome financing hurdles will determine the success of such agreements. But if the agreement leads to new nuclear power generation, it bodes well for similar economies to undertake new reactor builds.

Soviet reactor reaches end of life in Armenia

Russia dominates Armenia’s energy system, but Armenian foreign policy has shifted dramatically away from Moscow in the past year, in part due to the lack of Russian military assistance to Armenia when Azerbaijan seized Nagorno-Karabakh.

The policy change will not immediately impact Armenia’s Soviet-era VVER-440 nuclear reactor at Metsamor, which has received several upgrades and lifetime extensions—the latest, with Rosatom’s support, will sustain the remaining operational reactor until 2036. However, preparations must be made in the coming years to: extend the operational lifetime (a highly unlikely outcome due to the reactor’s age); build new light-water reactors (whether from China, Russia, South Korea, or the United States); or invest in small modular reactors (SMRs). Armenia may seek to build an SMR rather than a traditional reactor due to limited financing options and low power consumption.

To build a new reactor, Armenia might want to follow Romania’s blended model for financing its SMR deal with NuScale. The EXIM and US International Development Finance Corporation offered Romania tentative financial support totaling $4 billion. Public and private partners then formed a coalition of stakeholders from Japan, South Korea, the United Arab Emirates, and the United States to finance the SMR project up to $275 million. If further capital is needed, private financial institutions have also recently announced their plans to support the nuclear industry. Whether and when construction begins for the reactor in Romania will demonstrate feasibility, but so far, the financial structure has shown promise.

A great nuclear power balance

In partnership with allies, the United States should advance financial and commercial solutions to help countries dependent on Russian nuclear energy diversify their domestic power programs. The United States is well positioned to do so. Trump, and Biden before him, have supported nuclear energy domestically, which, in turn, can result in the export of US technologies and expertise. Strong bipartisan appropriations from multiple administrations will reinforce Trump’s vision and the domestic nuclear energy industry. In 2019, during Trump’s first administration, the Nuclear Energy Innovation and Modernization Act became law, paving the way for a streamlined advanced reactor licensing process. Under the Biden administration, the multibillion-dollar appropriations from the Infrastructure Investment and Jobs Act and the Inflation Reduction Act bolstered the US nuclear energy industry. Further, the 2023 Nuclear Fuel Security Act and the 2024 ADVANCE Act enjoyed bipartisan support on Capitol Hill.

Building on these domestic advances, Trump’s embrace of financial vehicles, such as the EXIM Bank or DFC, that bridge public and private sectors, will facilitate investments in multi-billion dollar infrastructure projects outside of the United States and bolster US energy-related exports, including from its domestic nuclear energy industry. These factors bode well for the United States to substantially weaken Russia’s share of global nuclear markets and its geopolitical influence.

(This post is republished from Atlantic Council.)

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