Assessing Geopolitical Risk Premium in Energy and Infrastructure Assets Amid the Ukraine Conflict

The war in Ukraine has catalyzed a seismic shift in global energy strategies, accelerating investments in decentralized, resilient infrastructure and nuclear energy. As nations recalibrate their energy security priorities, the geopolitical risk premium-the additional return investors demand for exposure to volatile regions-has become a critical factor in evaluating energy and infrastructure assets. This analysis identifies undervalued defensive equities and infrastructure ETFs poised to benefit from this paradigm shift, drawing on recent market trends and valuation metrics.

Energy Security and the Ukrainian Model

Ukraine's energy system has become a case study in post-conflict reconstruction and decarbonization. By 2025, the country has deployed 1,500 MW of solar capacity and partnered with private firms like DTEK and Fluence Energy to build one of Eastern Europe's largest battery storage systems, enhancing grid resilience against Russian attacks. International aid totaling $5 billion supports these efforts, with $53.7 billion allocated for rebuilding energy systems aligned with EU climate goals. The scale of this transformation underscores the dual imperative of energy security and sustainability, offering a blueprint for other nations facing geopolitical vulnerabilities.

Undervalued Defensive Equities in Nuclear Energy

Nuclear energy has emerged as a cornerstone of energy security, driven by AI-related power demands and the need for carbon-free baseload generation. Three key equities stand out:

1. Constellation Energy (CEG)
   As the largest operator of nuclear reactors in the U.S., Constellation Energy is a linchpin in the carbon-free energy transition. With a P/E ratio of 41.69 (as of November 2025) and a price-to-book (P/B) ratio of 7.79, the stock trades at a premium to the Utilities sector average but is estimated to be undervalued relative to its intrinsic fair value of $403.77. Analysts highlight its strategic partnerships, such as a long-term energy agreement with Meta, as catalysts for growth.

2. Cameco (CCJ)
   A dominant uranium producer supplying 17% of the global market, Cameco benefits from rising nuclear fuel demand and U.S. government support, including a $80 billion reactor production deal with Westinghouse. Despite a P/E ratio of 62, reflecting high expectations, its strong balance sheet and geopolitical insulation from supply chain risks position it as a "Moderate Buy" with a 31% projected upside.

3. NuScale Power (SMR)
   A pioneer in small modular reactor (SMR) technology, NuScale has secured NRC certification and is developing projects like Romania's RoPower 6-module reactor. While its valuation is contentious-estimates range from $3.23 to $40.50 per share-its P/B ratio of 8.7x suggests the market balances optimism about long-term potential against near-term execution risks. Analysts view it as a high-growth, high-risk play in the next-generation nuclear sector.

Infrastructure ETFs for Energy Security Exposure

For diversified exposure, infrastructure ETFs like the VanEck Uranium and Nuclear ETF (NLR) and Sprott Uranium Miners ETF (URNM) offer compelling opportunities. The NLR ETF, with $3.6 billion in assets, holds a concentrated portfolio of uranium miners and nuclear operators, including 8.07% in Cameco and 7.85% in Constellation Energy. Analysts project a 13.75% upside, with a price target of $155.64 as of November 2025. The URNM ETF, focused on uranium miners, provides pure-play exposure to supply chain dynamics, capitalizing on geopolitical tensions and U.S. policy reforms.

Geopolitical Risk Premium and Valuation Dynamics

The geopolitical risk premium is most pronounced in uranium supply chains and nuclear infrastructure. For example, Cameco's flexibility in sourcing uranium-spanning production, inventory, and long-term purchases-mitigates supply chain risks, a critical advantage in a fragmented market. Similarly, NuScale's SMR technology addresses grid resilience concerns, aligning with Ukraine's decentralized energy strategy. These dynamics justify premium valuations for companies with strategic relevance to energy security.

Conclusion

The Ukraine conflict has redefined energy security as a geopolitical imperative, creating tailwinds for nuclear energy and infrastructure resilience. Constellation Energy, Cameco, and NuScale Power represent undervalued equities with strong fundamentals and geopolitical tailwinds, while ETFs like NLR offer diversified access to this sector. As global demand for carbon-free, decentralized energy grows, these assets are well-positioned to outperform, supported by both immediate reconstruction needs and long-term decarbonization goals.