Investing in Latin American Nuclear: Why the "High-Risk" Label is Wrong

The investment landscape for nuclear energy in Latin America is shaped by a persistent mismatch between global capital’s perception of risk and the region’s actual operational, regulatory, and institutional record. For international nuclear vendors, EPC firms, fuel-cycle companies, and strategic investors, Latin America is frequently grouped into a generalized “high-risk” emerging-market category, defined by assumptions of political volatility, fiscal instability, and regulatory uncertainty. Yet a closer examination of the region’s core nuclear markets (Argentina, Brazil, and Mexico) reveals a markedly different reality: one of long-term institutional continuity, proven operational excellence, and growing strategic necessity.

This disconnect has created what can be described as a Latin American nuclear discount, in which project risk premiums and costs of capital are inflated by headline narratives that rarely align with the sector’s historical performance. Traditional risk-rating models tend to capture macroeconomic volatility, but fail to account for the nuclear sector’s unique governance structures, cross-party political insulation, and decades-long operational track record. The result is systematic mispricing that obscures commercially viable opportunities across the region.

Decades of High-Performance Baseload Operation

Any serious assessment of nuclear risk in Latin America must begin with the operational reality of its existing reactor fleet. Unlike many emerging markets where nuclear power remains aspirational, Argentina, Brazil, and Mexico operate mature facilities that have delivered stable, high-performance baseload power across multiple political and economic cycles.

Mexico’s Laguna Verde Nuclear Power Plant illustrates this point clearly. In 2024, the facility achieved a capacity factor of 87.9%, placing it firmly within the performance range of leading nuclear fleets in North America and Western Europe. This level of reliability is not incidental; it reflects a deeply embedded operational culture that has endured currency crises, administrative changes, and power-sector reforms without compromising safety or output.

Laguna Verde’s strategic role extends beyond generation metrics. The plant supplies approximately 4.8% of Mexico’s total electricity, serving as a critical asset for frequency and voltage regulation within the National Power System. Its low operating costs and high availability have made it indispensable to the Federal Electricity Commission (CFE), particularly as Mexico balances growing demand with grid stability requirements.

A similar pattern emerges in Brazil and Argentina. Brazil’s Angra reactors and Argentina’s Atucha and Embalse plants provide firm, carbon-free electricity that underpins national energy security. As both countries approach the technical and hydrological limits of their hydroelectric fleets, nuclear’s role as a dependable baseload source is becoming increasingly pronounced.

Nuclear as Insurance Against Hydrological Volatility

One of the most underappreciated drivers of nuclear expansion in Latin America is the region’s rising exposure to climate-induced hydrological risk. South America’s power systems have historically relied on abundant freshwater resources, with Brazil generating over 60% of its electricity from hydropower. However, this dependency has revealed structural vulnerabilities.

The 2021 Brazilian water crisis (the most severe in nearly ninety years) forced reservoirs to historic lows and triggered the widespread dispatch of expensive, carbon-intensive thermoelectric generation. Electricity tariffs rose sharply, contributing to inflationary pressure across the economy. This episode fundamentally altered the commercial calculus around firm generation assets.

In this context, nuclear energy is increasingly viewed not as a competitor to renewables, but as a hydrological stabilizer. By providing continuous baseload power, nuclear plants allow hydroelectric reservoirs to be preserved during dry periods, effectively functioning as stored energy. This “hydrological insurance” value is rarely captured in financial models that treat nuclear primarily as a high-capex alternative to wind and solar, rather than as a system-level enabler of grid resilience.

Chile offers a parallel example. The country has aggressively expanded its renewable capacity, with wind and solar now accounting for more than 33% of electricity generation. Yet this rapid deployment has exposed an intermittency gap that drought-prone hydro resources and a declining coal fleet cannot fully address. In 2023 alone, Chile curtailed 2.4 TWh of renewable energy due to grid constraints and oversupply. For international vendors, this creates a compelling opportunity for small modular reactors (SMRs) to deliver 24/7, zero-carbon power to support green hydrogen production and the country’s globally significant mining sector.

Regulatory Maturity and Institutional De-Risking

Another major source of mispricing lies in assumptions about regulatory fragility. Contrary to popular perception, Latin America has spent decades constructing nuclear regulatory institutions that are both technically competent and internationally integrated.

Brazil’s establishment of the National Nuclear Safety Authority (ANSN) created an independent, administratively autonomous regulator responsible for nuclear safety and radiation protection. This body complements the strategic role of CNEN, separating promotion from regulation in line with international best practice. The result is a governance framework that aligns closely with OECD standards.

Argentina’s Nuclear Regulatory Authority (ARN) offers an equally strong example. Even during periods of severe macroeconomic stress, the ARN has maintained a reputation for technical rigor and independence. Its participation in the Brazilian-Argentine Agency for Accounting and Control of Nuclear Materials (ABACC) represents one of the world’s most successful bilateral safeguards regimes, demonstrating that regional nuclear stability is anchored in institutional arrangements that transcend domestic political cycles.

Mexico’s regulatory evolution follows a different path but offers its own form of predictability. The 2025 shift toward centralized energy planning under the Ministry of Energy (SENER) and the National Energy Commission (CNE) introduced a binding planning framework in which strategically designated projects benefit from streamlined permitting and guaranteed grid access. For long-life nuclear assets, this form of policy certainty can materially reduce development risk.

The 2025 Multilateral Financing Pivot

Perhaps the most significant recalibration of nuclear risk in Latin America occurred not at the national level, but within the global financial architecture. In June 2025, the World Bank reversed its six-decade prohibition on financing nuclear energy projects, acknowledging that global decarbonization targets and plans to triple nuclear capacity by 2050 cannot be met without nuclear investment.

This policy shift has direct implications for Latin America. By focusing on SMRs and life-extension projects, the World Bank introduces access to long-tenor, low-interest capital capable of reducing weighted average cost of capital across the region. This alone challenges long-held assumptions about nuclear financing constraints in emerging markets.

Shortly thereafter, CAF—the Development Bank of Latin America and the Caribbean—signed a memorandum of understanding with the IAEA to support nuclear technology deployment for energy security. Under this agreement, the IAEA provides technical assistance across energy planning, infrastructure development, innovation, and radioactive waste management, strengthening CAF’s capacity to finance nuclear projects responsibly. Together, these moves signal a structural shift in how nuclear risk is assessed by multilateral lenders.

Industrial Capability and Supply Chain Depth

Another overlooked dimension is Latin America’s role as a contributor—not merely a consumer—within the global nuclear supply chain. Argentina’s INVAP, founded in 1976 as a spin-off from the Argentine Atomic Energy Commission (CNEA), exemplifies this capability. Beyond its domestic contributions, INVAP has won high-profile international tenders, including Australia’s OPAL reactor and the Netherlands’ Pallas reactor, demonstrating world-class engineering and project execution capacity.

Brazil’s NUCLEP further strengthens the region’s industrial profile. As a manufacturer of heavy nuclear components such as steam generators and reactor pressure vessels, NUCLEP occupies a strategic niche at a time when global manufacturing capacity for large nuclear components remains constrained. For international vendors, the presence of such firms reduces execution risk and enhances localization strategies.

Mining, Hydrogen, and Structural Demand Growth

Market demand for nuclear energy in Latin America is increasingly driven by two capital-intensive sectors: mining and green hydrogen. Chile, Brazil, Argentina, and Peru collectively hold 60% of global lithium reserves and 40% of copper reserves, positioning the region at the heart of the energy transition. Yet mining operations require continuous, high-reliability power that intermittent renewables alone cannot deliver.

This dynamic creates a substantial addressable market for SMRs. Chile’s green hydrogen strategy alone targets 25 GW of electrolyzer capacity by 2040, implying enormous demand for clean, dispatchable electricity. Nuclear power, with capacity factors exceeding 90%, compares favorably with solar and wind, which typically operate between 20% and 40%.

Institutional Persistence Beyond Political Cycles

The most enduring argument against nuclear investment in Latin America is political instability. Yet the nuclear sector consistently defies this narrative. In Brazil, the nuclear program has persisted through transitions from military rule to democracy, driven by enduring objectives of energy security and technological sovereignty. The formation of the United Parliamentary Front for Nuclear Technology in 2023 reflects rare cross-party consensus in support of nuclear development.

In Argentina, even aggressive fiscal restructuring has not dismantled the nuclear sector. Instead, the government is pursuing partial privatization of NASA to attract private capital, reinforcing nuclear energy’s status as a strategic, depoliticized national asset.

Repricing Reality

For global capital, the challenge is not that nuclear risk in Latin America is excessive, but that it is misunderstood. Operational performance, regulatory maturity, multilateral financing access, industrial capability, and structural demand all point toward a market where risk-adjusted returns may be stronger than prevailing assumptions suggest. The Latin American nuclear discount persists not because of evidence, but because of inertia in how risk is modelled.

For international nuclear vendors and investors willing to look beyond conventional narratives, the region offers not a speculative opportunity, but mispriced certainty.