Sovereign wealth funds – Driving growth of the nuclear power sector

Abstract

The nuclear industry is experiencing significantly difficult times, and one of the crucial concerns is that the construction of new power plants is being stymied by the lack of long-term investment capital. State-owned investment funds, frequently referred to as sovereign wealth funds (SWFs), represent the fastest-growing group of global investors whose total assets under management have soared from $2 billion in 2005 to $6.6 billion in 2014, according to the United Nations Conference on Trade and Development (UNCTAD) are simultaneously looking for investment opportunities with long term horizon and guaranteed stable income.An example of the symbiotic relationship is the one between Rosatom - the Russian Federation National Nuclear Corporation and the Russian SWFs. It demonstrates a specific business model where the SWF serves as a funding and financial guarantee authority for the state-owned corporation. This kind of relationship offers unique advantages to the entire industry, significantly strengthens Russia's international position, and contributes substantially to government revenues.Despite its economic and political advantages, this model also involves specific threats, especially in times of economic recession when a large fiscal deficit can have a devastating impact on the whole industry and simultaneously lead to severe damage in international relationships.