To address the massive electricity gap caused by the rapid development of artificial intelligence, the Trump administration is planning to allocate "tens of billions" in federal funding to finance the construction of new nuclear power plants. This initiative aims to secure the energy foundation required for the AI revolution and position the government as the ultimate financial backstop for this critical industry.

The U.S. Department of Energy’s Loan Programs Office (LPO) will direct the majority of its funds toward supporting nuclear power plant projects, according to Energy Secretary Chris Wright at a conference hosted by the American Nuclear Society. The LPO holds authority for hundreds of billions in financing assistance, including loan guarantees for projects struggling to secure bank loans.

This policy directly addresses a core market concern: sourcing the enormous capital needed for energy infrastructure to meet the surging power demands of AI data centers. Without strong government intervention, the current AI boom could falter due to energy constraints. Wright set a clear goal of having "dozens of nuclear plants under construction" by the end of his term in "three years and three months."

The move also extends a series of pro-nuclear policies. Earlier this year, President Trump signed an executive order in May mandating the construction of 10 large-scale nuclear reactors by 2030, solidifying the administration’s strategy to tackle AI’s power needs through nuclear energy. A wave of debt financing agreements is expected in the coming weeks and months.

AI’s exponential growth is placing unprecedented strain on the U.S. power grid, exposing a massive funding gap. Morgan Stanley estimates that by 2028, the U.S. will need at least 36 gigawatts (GW) of additional electricity to support data centers—a figure likely even higher today. With costs ranging from $50 to $60 billion per GW, the required investment in energy infrastructure could reach trillions, yet this funding remains unsecured.

Wright’s announcement signals that the U.S. government will step in to bridge this gap. He noted that AI-driven power demand will attract "creditworthy suppliers" to invest billions in equity capital for new nuclear capacity. The LPO can provide low-cost debt financing, with a leverage ratio as high as 4:1, accelerating project deployment through public-private partnerships.

The administration’s push for nuclear power also stems from stagnation in the sector. Currently, no commercial reactors are under construction in the U.S. During Trump’s first term, the LPO’s sole intervention was financing the Vogtle plant in Georgia. Now, the government’s ambitions are far greater.

Wright hopes to see dozens of projects break ground before his term ends—a goal shared by hyperscale cloud providers. OpenAI CEO Sam Altman has emphasized the market’s expectation for the U.S. government to act as the "guarantor of last resort." Without new nuclear plants, some warn the AI bubble could collapse dramatically.

Guided by government signals, private players are mobilizing. Tech giants like Alphabet, Amazon, Meta Platforms, and Microsoft are investing billions to restart decommissioned plants, upgrade facilities, and deploy new reactor technologies.

Westinghouse Electric, a key player, recently secured an $80 billion agreement with parent companies Cameco and Brookfield Asset Management to build reactors nationwide. CEO Dan Sumner confirmed plans to use its modernized AP1000 reactor design, capable of powering over 750,000 homes. Cameco COO Grant Isaac noted strong market interest in the investment, with government tools available to facilitate financing.

Despite the potential, large-scale nuclear projects face challenges, particularly cost overruns. Westinghouse previously struggled with AP1000 delays and budget issues, filing for bankruptcy in 2017 after overruns in Georgia and South Carolina. This history has opened doors for alternatives like small modular reactors (SMRs) from NuScale Power and Nano Nuclear, offering lower costs and faster deployment.

Under an October agreement, Westinghouse may spin off as a standalone public company, with the U.S. government potentially taking a stake to align its credit with project success.