The ongoing UN Climate Conference in Brazil has once again brought the issue of energy supply into the spotlight. The United States and Germany, however, are taking very different paths: while Washington is setting new standards in industrial policy through multi-billion-dollar investments in nuclear energy, Germany, following its nuclear phase-out, continues to rely on a volatile power supply and faces persistently high electricity prices.
“Energy is becoming a geopolitical factor in investment – energy security is the new ESG,” says Thorsten Fischer, Managing Director and Head of Portfolio Management at Moventum AM, the German fund manager.
America’s nuclear energy renaissance
In the United States, nuclear energy is currently experiencing a renaissance as a driving force of industrial policy. The latest example is a strategic alliance between the US government and the owners of Westinghouse Electric, Brookfield and Cameco.
Ten new reactors are to be built nationwide by 2030, representing an investment volume of at least 80 billion US dollars. Government subsidies and fast-track approval procedures – completed within just 18 months – are accelerating progress. A particularly notable feature is the government’s profit participation: 20 per cent on profits exceeding 17.5 billion US dollars.
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“This project is also a major job creator,” Fischer explains. More than 100,000 new jobs in construction and a further 45,000 in industrial manufacturing will be created across more than 43 states. The message is clear: energy policy is being pursued as an active component of a comprehensive industrial strategy. Nuclear energy supports the reindustrialisation of the United States, ensures energy self-sufficiency, and powers high-tech sectors.
German electricity prices remain high
Germany, by contrast, shut down its last nuclear power plant in April 2023, taking the opposite approach despite the energy crisis and increasing import dependency. The country’s electricity supply is based on the expansion of renewable energy sources such as wind and solar. At the same time, electricity prices remain high, with industrial customers in Germany paying almost twice as much as those in the United States.
However, this price gap is not primarily due to nuclear power being cheaper. Rather, regulatory peculiarities in Germany drive costs upwards: taxes, surcharges and levies often account for more than half of the electricity price.
Investments in grids, storage and decommissioning of power plants are cross-financed through electricity prices, unlike in the US, where regional subsidies and lower fees strengthen competitiveness. In addition, lengthy planning procedures, political uncertainty and high levies further burden Germany. “Ultimately, the difference lies in the systems and political frameworks,” Fischer explains. “Generation costs play only a secondary role in the price gap.”
Climate policy without an industrial foundation
The consequences for competitiveness and industrial location are significant. “The US strategically links industrial policy and energy supply, while Germany is pursuing climate policy largely without an industrial foundation,” Fischer notes. Yet low and predictable energy costs are a crucial factor for energy-intensive industries such as chemicals, steel, semiconductors and batteries.
Moreover, through Westinghouse, the US secures access to so-called Small Modular Reactors – modern modular nuclear units. As a result, investors increasingly favour the United States as a predictable location with targeted incentives, while Germany risks losing production capacity due to high energy costs and regulatory uncertainty.
From an investor’s perspective, the conclusion is clear: energy is becoming a geopolitical investment factor. Fischer states, “Those who pursue competitive industrial policy will attract jobs and capital flows.”
The United States is combining energy supply and industrial strength in one package – offering stable, investor-friendly conditions that private equity and infrastructure investors are likely to take advantage of early on. Germany, on the other hand, risks being left behind.
Whether the US model will remain sustainable in the long term or whether neglected climate protection will exact its price remains to be seen. For now, the implications for investors are clear: “Overweight US industry and infrastructure and selectively position in high-quality European stocks with global exposure,” says Fischer.
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