In a recent post, Where Is All That Electricity Going to Come From?, I examined the growing demand for electricity in New England, driven by the electrification of heating and transportation, the expansion of data centers, and the increasing demands being placed on our regional electric grid.

That discussion naturally leads to another question. Even if we agree that additional electricity generation will be necessary, how do we get the facilities that produce it built?

A recent announcement from New York provides an interesting look at that question.

The New York Power Authority (NYPA) has announced that it has qualified ten nuclear developers for potential participation in its effort to bring at least 1,000 megawatts of new nuclear generating capacity to upstate New York. The initiative is part of a broader state objective of adding 5,000 megawatts of nuclear generation.

Among the qualified companies is NextEra Energy, the owner of the Seabrook nuclear generating station in New Hampshire. Other companies include TerraPower, Holtec International, and X-energy. The list includes developers interested in conventional large-scale nuclear reactors as well as smaller modular reactors, commonly referred to as SMRs.

This is an important development, although some perspective is necessary. New York has not selected a developer, approved a specific project, established a construction budget, or begun building a reactor. The qualification process is an early step in what will necessarily be a lengthy undertaking.

What makes the New York initiative especially interesting is not simply the choice of nuclear technology. It is the potential financial structure behind the effort.

Building a nuclear reactor is an extraordinarily expensive proposition. Construction costs can run into the billions of dollars, with substantial risks associated with regulatory approvals, construction schedules, and cost overruns. Even after a reactor is completed, the developer must be able to sell the electricity at a price sufficient to recover that investment.

That brings us to the distinction between what is commonly called merchant generation and a project supported by some form of public financing or regulated revenue arrangement.

In a merchant electricity market, a private developer generally assumes the financial risks of constructing a generating facility. Its revenue comes from selling electricity into the wholesale market, through long-term power purchase agreements, or some combination of the two.

For a project requiring billions of dollars in upfront investment, the uncertainty of future wholesale electricity prices presents a substantial obstacle. A developer cannot simply assume that the price of electricity twenty years from now will be sufficient to repay its construction costs.

The financial challenges were highlighted by NextEra Energy during discussions about the future of nuclear generation in New England.

Michelle Gardner, NextEra’s Executive Director of Northeast Regulatory Affairs, has emphasized the importance of long-term revenue certainty for developers contemplating new nuclear construction. At a New Hampshire nuclear discussion earlier this year, she put the matter succinctly: “No one, and I’m happy to be challenged, is going to develop nuclear without a contract.”

At the September regional nuclear summit at UMass Lowell, Gardner again emphasized the importance of financial support and protection against the substantial costs associated with constructing new nuclear facilities.

That position was reinforced in NextEra’s October 2026 earnings remarks, when the company stated that any new nuclear construction would require appropriate commercial terms and risk-sharing arrangements that limit its financial exposure.

My understanding from multiple conversations with NextEra confirms that position. The company is not contemplating construction of additional nuclear generation on speculation. Before committing the enormous capital required, a developer needs reasonable certainty that the electricity can be sold at a price sufficient to support the investment, along with an acceptable allocation of construction and financial risk.

That is not an unreasonable position. It is a recognition of the economics of nuclear power development.

New York is approaching the issue through its publicly owned Power Authority, which is exploring potential development partnerships and financial arrangements. The precise structure remains to be determined, but the state’s involvement creates opportunities to examine financing and risk-sharing mechanisms that would not ordinarily exist for a purely merchant project.

There is an instructive example across the Canadian border.

Ontario Power Generation is constructing a small modular nuclear reactor at its Darlington site. Unlike a merchant generating project, Darlington operates within a regulated framework that permits recovery of approved costs through electricity rates. Ontario has also developed public financing and investment arrangements to support construction.

This does not eliminate financial risk. Indeed, the Darlington project has recently acknowledged construction cost and scheduling difficulties. But it does establish a mechanism for recovering approved investments that is fundamentally different from relying entirely on future wholesale electricity prices.

What does all of this mean for New England?

Earlier this year, the governors of all six New England states agreed to examine the potential for additional nuclear generation. That effort included a September summit at UMass Lowell, where state officials, utilities, developers, and other interested parties discussed nuclear technology, financing, and possible locations for new generation.

New Hampshire has identified the existing Seabrook nuclear station as one location worthy of consideration. The station already produces approximately 1,250 megawatts of electricity, making it a critical component of New England’s existing supply.

The New England initiative is at an exploratory stage, and that is an important distinction from New York’s more formal developer qualification process. The regional governors have specifically identified innovative financing, federal assistance, and public-private partnerships as subjects for further examination.

Those financial questions may ultimately prove every bit as important as the choice of reactor technology.

And this brings us back to Massachusetts.

Massachusetts is pursuing policies that would increase the use of electricity for heating and transportation while reducing reliance on fossil fuels. Whatever one’s view of those policies, the resulting demand for electricity must be accommodated by the regional power system.

The electricity does not necessarily have to be generated in Massachusetts. New England operates through an interconnected regional grid, and generating facilities in New Hampshire, Connecticut, or elsewhere can supply customers throughout the region.

But the financing question does not disappear simply because the generating facility is located across a state line.

If additional nuclear generation is eventually considered necessary to meet New England’s electricity needs, the region will have to confront two basic questions: Who will assume the financial risks of building it, and who will commit to purchasing the electricity at a price that supports the investment?

New York has begun a formal process to explore those questions through its public power authority. New England is examining them through a regional cooperative effort. Neither has yet demonstrated that a new nuclear project can be delivered at an acceptable cost.

That is the next stage of the electricity discussion.

In my earlier post, I asked where all the electricity was going to come from. The developments in New York suggest a companion question that may be just as important:

Who is going to pay to build the generating capacity we will need?

New York Power Authority November Announcement.

New Hampshire Bulletin “Why Nuclear, Why New Hampshire, Why Now.“

NextEra Third Quarter Earnings Remarks

New England Governors Association Regional Nuclear Power Summit