URS bets on nuclear to power AI and lower emissions

Three months ago, a small modular reactor (SMR) manufactured by nuclear energy start-up Valar Atomics, was transported by a C-17 cargo plane from March Air Force Base in Riverside, California to Hill Air Force Base in Ogden, Utah. That reactor, officially known as Ward 250 and the size of a small water tower, is designed to be mass-produced, transportable, and used off-grid.

Today, Ward 250 stands tall in central Utah’s high desert, the newest and most exciting addition to Emery County’s San Rafael Energy Research Center. In one miraculous leap forward, particularly for nuclear energy enthusiasts, Ward 250 promises a potential near-term solution to both the climate emergency and surging demand for AI-empowering electricity.

On board the C-17, US Energy Secretary Christopher Wright talked above the din with Valar’s founders and a cohort of venture investors all betting on America’s nuclear renaissance. Also on board was John Skjervem, chief investment officer of the $67 billion Utah Retirement Systems (URS), who was quietly conducting due diligence in support of a thesis that next generation nuclear energy and the money pouring into it will truly change the world.

In the public pension world, that thesis is still unique and, according to Skjervem, very lonely as most public fund peers are still hesitant to enter the nuclear space.

URS, on the other hand, is busy building a portfolio of direct, and often early-stage investments to both hedge the faint but growing obsolescence risks embedded in its legacy fossil fuel investments as well as participate in the dual tsunamis of exponential energy demand growth and an increasingly urgent decarbonisation imperative.

URS refers to this effort as the Utah Alternative Energy Portfolio (UAEP) for which Skjervem and his staff sought and received formal board authorisation. URS investments in traditional (oil and gas) and transitional (wind and solar) energy sources comprise approximately 5 per cent of total fund capital.

The UAEP, on the other hand, is still quite nascent but already holds direct positions in advanced nuclear (both fission and fusion) as well as hydrogen and ammonia-based clean energy strategies.

Skjervem says this direct investment approach was not his or his staff’s preference given the highly technical and scientific nature of the required underwriting processes, but early investigations into fund offerings came up empty in terms of strategy and portfolio fit. That, Skjervem says, is changing as more GPs enter the alternative energy space with greater focus, and he expects select fund positions may soon complement his team’s ongoing direct investment efforts.

Last year, those direct efforts included support for Oppenheimer Energy Ventures, a private company led by Charles Oppenheimer (J. Robert’s grandson) which is pursuing existing, permitted sites to develop the conventional, large-scale fission reactors Oppenheimer believes will do most of the heavy lifting as the US seeks to quadruple its nuclear capacity.

Unfortunately for him and URS, the final bid to revive the V.C. Summer nuclear power plant in South Carolina was awarded to infrastructure behemoth, Brookfield.

But small-scale fission technologies like Ward 250 are where Skjervem sees the biggest opportunity and where nuclear energy can perhaps finally shed its stigma with safety concerns. He says the generational leap in nuclear safety is structural, moving from active systems that require human monitoring and intervention to passive designs that use the fundamental laws of physics to ensure safety. This design transition will make advanced reactors fundamentally more resilient to the human error and external hazard scenarios that drove past disasters.

And when mass produced in assembly line scale, SMRs can move the nuclear industry beyond its long history of huge and often economically debilitating cost overruns. Finally, SMR siting only requires a 10-acre plot, enabling ready and flexible access to affordable clean energy with greatly reduced implementation timelines.

Reasons to invest

Skjervem’s investment thesis is supported by the fact that nuclear is the only clean energy source capable of meeting explosive AI energy demands, where he says mind-boggling estimates suggest the US will soon need an additional 200GW to 300GW of new generation capacity, equivalent to around five new power plants in every state.

He adds that nuclear is also the only clean energy source that can provide “five nine” reliability – or is available 99.999 per cent of the time – the standard required to power cloud infrastructure, financial systems and data centres.

Conversely, he argues the intermittent generation profile of both wind and solar “hopelessly fails” this standard so tech giants like Microsoft, which is backing the recommissioning of Three Mile Island Unit 1, and other hyperscalers like Google and Amazon, are focusing on, and in some cases investing directly, in advanced nuclear technologies.

“At the macro level, renewables are a fool’s errand and will not save us,” says Skjervem. “The only viable solution is nuclear fission, in massive amounts, complemented by natural gas, wind and solar, until the world transitions to the holy grail of fusion at some point in the future. Fission buys us time to get to fusion, but scalable, into-the-grid fusion may not arrive in time, so we need fission now.”

The regulatory environment is also turning more accommodating following executive orders from the Trump administration designed to jumpstart the industry and ease permitting restrictions on new developments. These orders include firing life back into the Nuclear Regulatory Commission, which hasn’t permitted a single new nuclear power plant in its 51-year existence.

Skjervem is also encouraged by the industry attracting bipartisan support, evidenced by the ADVANCE Act (Accelerating Deployment of Versatile, Advanced Nuclear for Clean Energy) which was passed into law in 2024 and is already streamlining reactor licensing, accelerating deployment, and cutting regulatory barriers.

flying solo

But so far, URS appears to be the only US public pension fund venturing directly into the brave new world of transformational energy technologies. Skjervem says many of his peers are precluded from making direct investments by their governance structures or investment policies, and despite his best efforts dialling for dollars, he has been unable to persuade fellow CIOs to invest in any of the alternative energy projects he and his team have explored over the past couple of years.

The irony of chasing direct deals in cutting-edge technology as a 64-year-old Liberal Arts major isn’t lost on him either. But what he lacks in scientific training, he appears to make up for in passion, a characteristic that is highly valued by founders seeking an antidote to conventional investment thinking when it comes to nuclear.

“The founders working in this space are eager to find a broader group of like-minded investors who share both their vision and excitement for a nuclear-driven, clean energy future,” he says.

The URS team tracks SMR and other types of alternative energy innovation coming out of leading research universities like the Massachusetts Institute of Technology. URS is also advantaged by the fact that Texas and Utah are enjoying a concentrated inflow of testing and development activity, a function of those states’ deliberately friendlier permitting and policy frameworks.

The emergence of new nuclear ecosystems is visible in other pockets around the US too, most notably the South Bay area of Los Angeles which Skjervem says encapsulates the very best of US innovation and optimism.

“Companies there compete on two dimensions: the breakthrough potential of their innovations and the fervour of their patriotism.”

Valar Atomics is located within blocks of the SpaceX headquarters building.

“Until Ward 250’s airlift to Utah, there was a fully functioning nuclear reactor in the middle of Hawthorne, California, four blocks from SpaceX on one side and a few blocks from the childhood home of the Beach Boys on the other!”

nuclear as a hedge and growth play

But it’s the investment thesis that really ignites Skjervem’s passion. He believes that both Utah’s alternative energy portfolio and its larger, strategic allocation to traditional energy sources are textbook examples of prudent investment management. The traditional energy assets (namely oil and gas) provide inflation protection and high cash yields, while the small but growing UAEP allocation serves as a long-term hedge against a shrinking fossil fuel industry while simultaneously enabling immediate participation in the race for newer, cleaner energy sources.

“The goal is to maximise returns through a diversified portfolio where the definition of diversification is owning assets whose return streams are less than perfectly correlated with one another. In other words, it’s portfolio construction 101.”

Just as it did in 2022, the diversification benefits of oil and gas will come to the fore as the current conflict in the Gulf continues to rage and oil tops $100 per barrel, providing inflation protection and spiking cash returns. But as the energy transition gathers pace, asset prices in the UAEP will hopefully ride the building tailwinds of what Skjervem believes will be the greatest growth market in a lifetime.

“In 2022, the average stock was down 25 per cent and fixed income had its worst year in recorded history, but our allocation to direct oil and gas assets was up over 40 per cent. We’re not bragging, we’re just being good fiduciaries,” he says, though he can’t resist highlighting the “stark contrast to the beneficiary returns other funds forfeited by enacting divestment mandates.”

As URS continues its brave and so far, lonely journey, Skjervem concludes with a plea to look at the facts: AI requires five-nines reliability and advanced nuclear reactors represent the fastest, cleanest and safest way to decarbonise the world economy.

“It’s within the realm of possibility that advanced nuclear reactors could dramatically change both the environmental and geopolitical landscapes within the next decade. We want to support and participate in that possibility, and we want American technology to prevail.”