Nuclear Energy and AI: How hyperscale tech companies are shaping the power landscape
Recently, I came across several articles discussing the growing demand from hyperscale tech companies like Google, Amazon, and Meta for reliable, low-carbon, 24/7 electricity to power their data centers, where they are developing AI capabilities in a race to win the so-called “AI war.” Nuclear power is currently the only carbon-free technology capable of delivering stable, 24/7 energy output on a large scale, making it particularly appealing to tech companies. One of the most insightful articles is from the Financial Times, which explores how the resurgence of nuclear energy in the US is driven by the demands of these high-tech giants.
According to the FT, the nuclear power industry—which has been stagnating in the US and Europe for decades due to public opposition stemming from major nuclear incidents (Three Mile Island in 1979, Chernobyl in 1986, and Fukushima in 2011)—is now poised for a potential revival.
Just last month, Microsoft announced plans to revive the decommissioned Three Mile Island nuclear plant in Pennsylvania, while Amazon paid $650 million in March to place a data center next to the Susquehanna Steam Electric nuclear plant, also in Pennsylvania. These tech companies are willing to pay a premium for their energy consumption, which could spark a wave of investment in nuclear energy. However, there are significant challenges.
Tech companies are not in a position to bear all the project risks. While they are open to signing long-term PPAs at premium prices, this won’t fully mitigate the risks of cost overruns and construction delays. The fundamental issue is that building new nuclear plants is a long-term, capital-intensive process, whereas tech companies need rapid expansion to accommodate their growing data center needs. Furthermore, the US nuclear industry’s track record—dating back to the 1970s and 1980s—is riddled with budget overruns and timeline delays. Even with premium pricing, the risks of new nuclear projects may be too high for tech companies, making them more likely to contract existing nuclear power instead of investing in new plants.
According to the FT, during a nuclear industry dinner ahead of New York Climate Week, Caroline Golin, head of energy market development at Google, expressed concerns that tech companies shouldn’t be expected to shoulder all the risks of nuclear projects. This was confirmed by two people present at the event. Although discussions around tech giants investing equity into nuclear energy development are ongoing, Microsoft, Google, and Amazon all declined to comment on the matter when approached by FT.
One potential solution is to rethink how PPAs are structured. For instance, it was suggested at the nuclear industry dinner that PPA pricing could be set later in the process, once construction cost overruns are better understood. However, no such structure currently exists, and for now, the easiest option seems to be contracting with existing nuclear plants or reviving recently decommissioned ones. Nevertheless, redirecting power from existing nuclear plants to meet the demands of tech companies could compromise the decarbonization goals of the states where these plants operate.
Another possible solution could lie in the use of small modular reactors (SMRs), which are cheaper and faster to build than traditional nuclear plants. This technology is promising, however still not mature, see What is the place of nuclear technology in the future energy mix? – ETT Center | ETT Center.
It’s clear that tech companies could provide financial backing and demand guarantees for new nuclear projects, but they need speed-to-market in return—something the nuclear industry has historically struggled to deliver.
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