In a significant pivot towards nuclear energy, major tech companies are making substantial investments in the sector to ensure a reliable power supply for their burgeoning needs. Microsoft has initiated the restart of the Three Mile Island nuclear power plant, while Google has partnered with small modular reactor developer Kairos to create 500MW of generation capacity. Additionally, Amazon has acquired stock in another small modular reactor company, X-energy. This shift signifies a notable change in the energy landscape as Big Oil also increasingly embraces nuclear power.
Historically, Big Tech has focused on the energy transition through the expansion of wind and solar energy to replace fossil fuels. However, with the onset of the AI race, these companies have recognized the necessity for a constant and robust electricity supply that wind and solar alone cannot provide. As Constellation Energy CEO Joe Dominguez remarked, “Nuclear plants are the only energy sources that can consistently deliver on that promise,” highlighting nuclear energy’s potential for providing abundant electricity with a low emissions footprint.
Google’s senior director for energy and climate, Michael Terell, emphasized the importance of their agreement with Kairos Power, stating, “This agreement is a key part of our effort to commercialize and scale the advanced energy technologies we need to reach our net zero and 24/7 carbon-free energy goals.”
Despite this significant investment, experts caution that the transition to nuclear power may take time. Although Microsoft’s deal with Constellation Energy to restart Three Mile Island is a positive step, it hinges on obtaining necessary permits, which may face hurdles due to public opposition to nuclear energy.
The technology surrounding small modular reactors (SMRs) remains largely untested at a commercial scale. The only project to attempt a commercial rollout, led by NuScale, encountered difficulties when it was revealed that electricity production costs would exceed initial estimates, leading to the loss of its agreement with a Utah utility.
Nonetheless, the urgency of data center expansion, driven by the AI boom, underpins the tech industry’s nuclear push. According to forecasts, data centers could account for 9% of total U.S. electricity demand by 2030, up from 3.5%. As electricity demand is expected to rise by up to 15% in the next five years, the reliance on nuclear energy appears poised to increase.
The growing focus on nuclear energy may have repercussions for the wind and solar sectors, particularly concerning the carbon credits market. Currently, major tech firms are significant purchasers of carbon credits generated by wind and solar installations, providing a vital revenue stream for these energy producers. If nuclear energy becomes more prevalent, the demand for carbon credits could plummet, undermining the financial viability of renewable energy sources.
While the journey towards nuclear energy may encounter obstacles, including potential technology failures and delays, the financial resources and urgent energy needs of Big Tech suggest a promising resurgence for nuclear power in the energy sector. In the interim, natural gas and coal are likely to maintain stable demand as the data center industry continues to expand.
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