Global energy transition: how renewables and nuclear power are driving clean growth

January 2026  |  SPECIAL REPORT: ENERGY & UTILITIES

Financier Worldwide Magazine

January 2026 Issue

The global energy system is at a pivotal inflection point. Faced with climate imperatives, ever-increasing electricity demand and geopolitical volatility, clean energy investment is surging, while energy security and independence in Europe, the Middle East and Asia have become strategic priorities.

In response to these demands, the concept of a dual track approach is gaining traction: one track focuses on rapidly scaling up renewable power generation, while the other expands nuclear capacity to deliver reliable baseload and grid stability. The two are not substitutes but in many respects complementary where renewables provide the bulk of incremental low-carbon supply typically generating on an intermittent basis, while nuclear baseload underpins systemic resilience.

Nonetheless, both tracks are shaped by a complex interplay of economic, technological and geopolitical drivers, while the presence of established fossil fuel-dependent industries and nations make the shift more challenging.

This article examines how these dynamics are reshaping global energy investment, exploring the rise of renewables, the strategic resurgence of nuclear, and the geopolitical and technological forces shaping the future energy landscape.

Global acceleration of renewables

Coal and oil demand continues to grow annually, but the pace has slowed since the post-coronavirus pandemic rebound in the early 2020s. In contrast, the momentum behind renewable energy deployment is now undeniable. The International Energy Agency has forecast that renewables will become the largest global source of electricity generation, surpassing coal, by mid-2026 at the latest. Investment is following suit: global energy investment was set to exceed $3.3 trillion in 2025, with clean energy technologies – namely renewables, nuclear, grid and storage – attracting roughly $2.2 trillion. China is central to this growth, both as a deployment market and an exporting powerhouse.

At conservative estimates, Chinese firms now manufacture and supply more than 80 percent of worldwide solar panels and 60 percent of wind turbine equipment. Meanwhile, emerging markets, notably in Africa and Southeast Asia, are embracing decentralised renewable architectures for cost-effective, rapidly deployable electricity access. This means that global capital and capacity growth are now largely concentrated outside Europe and North America. This shift is also driven by these markets’ willingness to reduce fossil dependence and by China’s use of renewables as a tool for industrial and geopolitical leverage.

Nuclear strategic resurgence

Europe and North America led in nuclear development from the 1960s before the industry stagnated from the 1980s to the early 2000s. Today, civil nuclear is back in the spotlight, driven by a combination of factors. Electricity demand has steadily increased in emerging markets for decades, while advances in artificial intelligence (AI) and cloud computing are creating unprecedented demand for energy-intensive infrastructure in mature economies. With its low-carbon footprint and dependable baseload output, nuclear complements net-zero ambitions in ways renewables alone cannot.

Nevertheless, nuclear ultimately relies on government regulatory and financial support as projects are complex, expensive and frequently subject to delay. For instance, the US is attempting to revitalise its nuclear sector through legislative and tax reforms, and loan programmes, incentivising the upkeep of existing plants and funding the development of modular and advanced nuclear reactors and nuclear enrichment facilities. France has approved a fleet of 14 new reactors by 2050, while the UK is cutting red-tape to accelerate deployment of its first small modular reactors (SMRs), aiming to reach 24GW by 2050.

However, investment in the West is dwarfed by China, which has around 30 new reactors under construction and aims to add six to eight annually to reach 200GW capacity by 2040. India is also scaling up significantly, targeting 100GW capacity by 2047. This momentum is also seen elsewhere in Asia. While no Association of Southeast Asian Nations state operates a nuclear plant, Myanmar is planning its first SMR in agreement with Russia, the Philippines is working with Korea to restore the Bataan Nuclear Power Plant, Vietnam is reviving a shelved Ninh Thuận programme and Malaysia is launching its own feasibility study. Unlike in the 1960s-70s, nuclear investment is now a global trend, advancing alongside renewable technologies.

Innovations shaping nuclear technology

Investment in nuclear energy technology is broadly split in two: large-scale gigawatt projects and modular reactors such as SMRs and micro‑modular reactors (MMRs). Large-scale projects remain embedded in the nuclear strategies worldwide, however, given their scale and complexity, they bring familiar challenges: high capital intensity, long construction times (frequently subject to delay), and associated risks, as evidenced by Hinkley Point C, Vogtle 3 and 4, and Flamanville‑3, where development times and costs have vastly exceeded projections. High capital costs and long lead times deter private investment.

In contrast, SMRs and MMRs promise to alleviate cost and timescale problems through modular deployment, using prefabricated, pre-tested, factory-built modules assembled offsite and installed onsite. Standardised designs allow for streamlined production, ultimately benefitting from economies of scale, established supply chains, and a skilled workforce to reduce costs and construction time. Their size also provides geographical flexibility absent in renewables. SMRs also offer tailored applications, from 5-15MW units powering off-grid communities to 200-plus MW units supplying power to medium-sized cities.

However, cost parity with large-scale projects is not expected until SMRs and MMRs have their manufacture and assembly standardised. Further, the smaller-scale reactors equate to smaller energy output and less revenue generation, reinforcing the need for tailored applications. Government support therefore remains integral for both large-scale and SMR project development. While there are currently over 80 SMR projects in development, primarily in the US, China and Russia, only the latter two have operational units.

Geopolitical and economic shifts

Traditional energy-security models are heavily centred on large, centralised generation exporting to transmission systems and imports (if necessary) of fossil fuels. The rapid rise of renewables changes this fundamentally, with thousands of generating stations often exporting to the distribution system. In Europe, the war in Ukraine and instability in the Middle East have sharpened the focus on energy security and independence, transforming low-carbon domestic generation from a climate ambition into an economic necessity. Volatile gas prices have reinforced the financial logic of renewables and nuclear, offering long-term cost stability and insulation from fuel shocks. Together, these geopolitical and market dynamics are redefining investment priorities in the region, as capital increasingly flows toward cleaner, more distributed, and strategically resilient power systems. Indeed, the European Investment Bank (the EU’s lending arm) estimates that Europe invests 10 times more in clean energy than in fossil fuels, a figure that has increased dramatically since Russia’s invasion of Ukraine in 2022.

Major hydrocarbon-exporting Gulf states, notably the United Arab Emirates and Saudi Arabia, are utilising their significant sovereign wealth funds and economic firepower to invest across clean technologies – a strategy designed to secure a position of influence in the emerging low-carbon economies, despite their huge domestic reserves of oil and gas. By investing heavily in solar, wind, hydrogen and carbon-capture technologies, these states are diversifying their revenue streams while exporting their capital and expertise into fast-growing renewable markets, particularly across Africa and Southeast Asia. In doing so, the Gulf is not only managing its own transition but also shaping the contours of global energy investment, increasingly positioning itself as a financial and strategic hub for the clean-energy era.

Shifting centres of global energy influence

While Europe has broadly continued its commitment to renewables investment (notwithstanding some difficult offshore wind tender rounds), the US has seen a diverging approach at the federal and state levels. At the federal level, the new administration has frozen renewables permitting and funding, rolled back environmental protections, and prioritised fossil fuel expansion and deregulation. Offshore wind has been particularly challenged. Things are different at the state level. States are adopting clean electricity targets, passing pro-renewable legislation and challenging the federal administration in court. This shows the deployment of renewables is not going away, particularly in regions where it makes sound economic sense.

Meanwhile, the centre of gravity is shifting toward Asia and the Middle East. China is the world’s largest producer and exporter of green technology and has a largely self-sustaining supply chain for nuclear energy projects. China alone exports more clean energy technology than the US exports oil, and its influence is expected to grow, given the enduring utility of clean energy.

At the same time, Middle Eastern investment is pivotal for international renewable projects, particularly in Africa. In addition to enabling energy and revenue diversification through renewables, existing oil and gas infrastructure can be repurposed for large-scale hydrogen and carbon storage systems.

While government support underpins nuclear feasibility, corporations have started to pursue nuclear energy projects for their own supply. Given the high capital costs, this approach is only gaining traction among very well-funded corporations – establishing a new era of corporate energy resilience and independence. This is especially true for corporations that require high levels of uninterrupted power, such as data centres and digital infrastructure.

SMRs and MMRs arguably better match expected energy demand growth and meet faster timescales for data centres more organically than large-scale counterparts. SMRs also provide self-sustained safety features and have a smaller footprint, allowing for geographical flexibility, as they can be connected within existing grids or off-grid, unlike large-scale projects.

Market forces and investment priorities

From a market perspective, rising fossil fuel prices, supply-chain tightness and regulatory risk are converging to elevate the investment case for renewables and nuclear. McKinsey & Company suggests global electricity demand could double or even triple by 2050 in some scenarios. Power from every source is needed, as is better management of that power, to avoid supply bottlenecks and meet decarbonisation targets, making sustained investment critical. This means not just build-out of generation, but investment in grids, storage, long-duration flexibility, transmission and enabling technologies.

From a market standpoint, three issues require sharp focus: policy certainty (stable tariffs, auctions and grid access), cost control (avoiding inflation, supply-chain disruption and interest-rate exposure) and trust (local permitting, community acceptance and de-risking). The growth of AI-enabled data centres and other digital infrastructure is encouraging new market entrants and placing new demands on energy systems; this emerging load growth requires steady baseload with flexible supply and pricing mechanisms, hence the renewed interest in nuclear as well as renewables.

The road ahead: navigating the future of global energy transition

The energy transition is no longer a narrative led predominantly by Europe or North America. Corporations and governments worldwide are actively working to resolve the energy trilemma: delivering sustainable, reliable and affordable energy. The interplay of Chinese state policy (spanning renewables and nuclear build-out), Middle Eastern capital deployment and developments in cloud computing and AI is reshaping the global energy status quo. In this context, the ‘centre of influence’ in energy is shifting, and investors must anticipate that dynamic energy systems, driven by renewables and nuclear, will increasingly define investment flows throughout the transition.

 

Al Budrikas and Chris Jeffery are trainee solicitors and Gareth Baker is a partner at Gowling WLG. Mr Budrikas can be contacted on +44 (0)20 7759 6982 or by email: al.budrikas@gowlingwlg.com. Mr Jeffery can be contacted on +44 (0)121 393 0857 or by email: chris.jeffery@gowlingwlg.com. Mr Baker can be contacted on +44 (0)20 3636 7863 or by email: gareth.baker@gowlingwlg.com.

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Al Budrikas, Chris Jeffery and Gareth Baker

Gowling WLG

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