WASHINGTON, June 12, 2025 (AFP) - The World Bank is re-entering the nuclear energy space "for the first time in decades," its President Ajay Banga said Wednesday, as it works towards meeting growing electricity demand in developing countries.

Banga said in an email to staff that the bank will work closely with United Nations nuclear watchdog the International Atomic Energy Agency (IAEA), "strengthening our ability to advise on non-proliferation safeguards" and regulatory frameworks.

The decision comes as electricity demand in developing countries is set to more than double by 2035, Banga noted in the memo seen by AFP.

To meet this need, annual investment in energy generation, grids and storage will have to increase from $280 billion today to about $630 billion.

"We will support efforts to extend the life of existing reactors in countries that already have them, and help support grid upgrades and related infrastructure," Banga said.

The Washington-based lender will also work to speed up the "potential of Small Modular Reactors" so these can become a viable choice for more countries eventually.

Banga, who took the helm of the development lender in 2023, has pushed for a change in the bank's energy policy -- and his letter comes a day after a board meeting.

"The goal is to help countries deliver the energy their people need, while giving them the flexibility to choose the path that best fits their development ambitions," Banga said.

Besides focusing on improving grid performance, he added that the institution will continue financing the retirement or repurposing of coal plants, supporting carbon capture for industry and power generation.

In April, on the sidelines of the International Monetary Fund and World Bank's spring meetings, US Treasury Secretary Scott Bessent said the bank could use resources more efficiently by helping emerging countries boost energy access.

He said that it should focus on "dependable technologies" rather than seek out "distortionary climate finance targets."

This could mean investing in gas and other fossil fuel-based energy production.

Bessent at the time also lauded the bank's efforts toward removing restrictions on support for nuclear energy.

Beyond the shift in nuclear energy financing, Banga said Wednesday that the bank has yet to reach agreement within its board on whether it should "engage in upstream gas," and under what circumstances it should do so.

The United States, which is the World Bank's biggest shareholder, is among countries to have campaigned for the group to rethink its ban on supporting nuclear projects.