Trump plans to invest $80 billion to restart the "AP1000" large nuclear power project with soaring costs, and Japan will "foot the bill."

To address the soaring electricity demand brought about by the explosion of the artificial intelligence industry, the U.S. government plans to invest $80 billion to restart the long-stagnant nuclear power industry domestically, betting on the Westinghouse Electric "AP1000" large reactor technology, which has been criticized for its out-of-control costs.

This ambitious plan will utilize funding support obtained from the trade agreement between the U.S. and Japan, aiming to free the U.S. from the historical shadows of delays and cost overruns in nuclear power construction and establish energy dominance in the AI era.

According to The Wall Street Journal, leveraging part of the proceeds from the U.S.-Japan trade agreement, the U.S. government announced in October this year a plan to collaborate with Westinghouse Electric and its owners Brookfield Asset Management and Cameco. The plan proposes to build eight AP1000 reactors at four locations, marking the scale of nuclear power construction not seen in the U.S. for decades.

This strategy signifies a significant shift in U.S. nuclear power policy: previously, market focus was largely on small modular reactors (SMRs), but now, driven by the massive energy consumption of AI data centers, large reactors with a capacity of about 1,100 megawatts are regaining favor.

As the financial backing for this plan, Japan has committed to investing up to $550 billion in U.S. critical infrastructure, and this round of nuclear power investment stems from that. According to the agreement structure, the U.S. government is not only a funding party but will also profit from the project. Once Westinghouse Electric's profits exceed $17.5 billion, the U.S. government will receive 20% of the excess portion, and in the future, Westinghouse Electric may even spin off as a publicly traded company with government ownership.

However, this massive bet faces extremely high execution risks. The last major nuclear power project in the U.S.—the Vogtle nuclear power plant in Georgia—ultimately exceeded $30 billion in construction costs, more than double the initial budget, and was completed seven years later than planned. Nevertheless, the Trump administration still attempted to control the cost of each reactor to around $10 billion through government endorsement and standardized construction to revive an industry that had previously deterred investors.

Betting on AI Energy Consumption and Energy Dominance

As the artificial intelligence boom breaks decades of flat electricity demand in the U.S., electricity shortages have become a key bottleneck constraining AI development. Dan Sumner, interim CEO of Westinghouse Electric, stated in an interview that these reactors will help the U.S. win the AI race and achieve the president's "energy dominance" agenda.

Sumner pointed out that Westinghouse Electric has the right technology, and this is a reasonable solution to meet U.S. electricity demand. Previously, due to slow electricity demand growth and the cheap natural gas brought about by the shale gas boom, the U.S. nuclear renaissance in the early 2000s was declared a failure. Sector & Sovereign Research analyst Hugh Wynne believes that small reactors make more sense when demand grows slowly, but in the current environment, large reactors better meet market needs.

If this plan can be realized, it will bring unprecedented certainty to Westinghouse Electric and its supply chain. Company executives stated that the proposed reactors would be sufficient to power medium-sized cities or large AI data centers

Japan's Capital Support and Profit Sharing Mechanism

The core of this transaction lies in leveraging external capital to boost domestic infrastructure construction. This deal has received support from Japan for the U.S. critical infrastructure investment plan. Wyatt Hartley, Co-CEO of Brookfield Renewable Partners, pointed out that the funding pool obtained through trade agreements will benefit both U.S. industry and Japanese manufacturing.

Hartley stated that the final structure not only directly benefits Westinghouse Electric but also provides the American public with an opportunity to participate in various profit-sharing arrangements. Brookfield and Cameco previously acquired Westinghouse Electric, which had emerged from bankruptcy protection, for approximately $7.88 billion, without assigning any valuation to the new reactor business, focusing instead on its fuel manufacturing and service operations. Now, with the shift in policy direction, its valuation logic may be reshaped.

Challenging the "Cost Curse" and Standardized Construction

Keeping the "overnight cost" (excluding financing costs) of a single reactor below $10 billion means overcoming the industry's long-standing fatal flaws: spiraling costs and project delays.

The Vogtle nuclear power plant's Units 3 and 4 are the only completed AP1000 units in the U.S., originally scheduled for completion in 2016 and 2017 at a cost of $14 billion, but they are not expected to come online until 2023 and 2024, with total costs soaring to over $30 billion. Severe cost overruns led Westinghouse Electric's former parent company Toshiba to file for bankruptcy in 2017. A similar project in South Carolina was abandoned in 2017 after exceeding $9 billion in costs. In contrast, China currently operates four AP1000 units and is constructing its own version, with another 14 units under construction.

Grant Isaac, President and COO of Cameco, stated that there are no longer technical, licensing, fuel supply, or regulatory risks associated with the AP1000; only project execution risk remains. The current goal is to minimize risks through standardization, sequencing, and simplification, "just repeating the same thing over and over again."

Execution Details Still to Be Clarified

Despite the grand vision, there remains uncertainty at the execution level. Jacopo Buongiorno, a professor of nuclear science and engineering at MIT, pointed out that the $80 billion scale is indeed suitable for accelerating nuclear power development, but there is currently a lack of detailed information regarding site selection, participating companies, timelines, and workforce. He believes that while the current statements are encouraging, they remain castles in the air without substantive content.

According to an executive order issued in May this year, the Trump administration proposed a plan to begin construction on 10 large reactors by 2030. In addition to new projects, the restart of existing facilities is also underway. Currently, Michigan, Pennsylvania, and Iowa are working to restart reactors. In South Carolina, utility company Santee Cooper is negotiating with Brookfield to sell its partially completed AP1000 project; if the deal is reached, these units may be completed specifically to power AI data centers Sumner believes that the U.S. government, as a "second actor," intervened and sent a strong signal to manufacturers, suppliers, and construction companies that orders will follow one after another, which is crucial for building confidence and lowering costs.