After years of championing renewable energy, major tech companies are beginning to realize that it may not meet their needs, prompting a shift toward reliable nuclear energy. Firms like Microsoft and Google are in urgent need of more power to support their artificial intelligence (AI) operations and are now investing in nuclear power. These companies have entered into agreements with nuclear plant operators and developers to supply energy for their data centers, leaving other customers reliant on the less dependable electricity generated from wind and solar sources. The federal government provides substantial subsidies for renewable energy, and numerous states have mandated that utilities buy wind and solar power, which require large land areas, are often located far from where the energy is needed, and necessitate further investments in transmission infrastructure, driving up costs. The demand for electricity is surging not only because of the significant investments tech firms are making in AI but also due to the electrification initiatives put forth by the Biden-Harris administration, which advocate for electric vehicles, trains, and buses, as well as the transition from natural gas heating and cooking to electric solutions.
Big Tech Investments
Microsoft has struck a deal with Constellation Energy to reactivate the closed Three Mile Island nuclear power plant in Pennsylvania. As part of the agreement, Microsoft will be the exclusive buyer of electricity generated by the plant once it resumes operations in 2028. This contract, which spans 20 years, includes provisions for safety upgrades and regulatory approvals for the reactor. Additionally, according to the New York Times, Microsoft has committed to purchasing power from Helion Energy, a Seattle-based start-up aiming to establish the world’s first nuclear fusion plant by 2028. Bill Gates, co-founder of Microsoft, has also invested over $1 billion in TerraPower, a start-up collaborating with Warren Buffett’s PacifiCorp to develop smaller nuclear reactors.
Meanwhile, Amazon and Google are focusing on a new generation of small modular reactors, which have yet to be successfully commercialized. These companies are optimistic that small modular reactors will be more cost-effective and easier to construct than the large reactors that face stringent regulations from the Nuclear Regulatory Commission, leading to high construction costs. Reports from the New York Times indicate that Google plans to purchase energy from small modular reactors being developed by Kairos Power, expecting their first reactor to be operational by 2030. According to the Wall Street Journal, Alphabet, Google’s parent company, is backing the development of seven small nuclear reactors, which will contribute 500 megawatts of power by the end of the decade.
Amazon is also investing in small modular reactors through X-Energy, participating in a $500 million funding round for three projects in Virginia and Washington state. In collaboration with Dominion Energy, Amazon aims to deliver at least 300 megawatts of nuclear power to Virginia, where nearly half of the nation’s data centers are located. In Washington, there’s an agreement with Energy Northwest, a coalition of public utilities, to finance the development, licensing, and construction of four small modular reactors. Energy Northwest will own and operate these reactors, supplying power to the grid for Amazon’s use, with the option to add up to eight additional modules.
The Wall Street Journal also reports that Amazon and X-Energy are working toward launching more than 5 gigawatts of new power projects in the U.S. by 2039, potentially marking the largest deployment of small modular reactors to date. The Journal also reports that X-Energy has initiated a Series C-1 financing round to support the completion of its reactor design, licensing, and the first phase of its TRISO-X fuel fabrication facility in Oak Ridge, Tennessee.
Additionally, Amazon previously secured a deal to co-locate a data center powered directly by the Susquehanna Steam Electric Station, an existing nuclear facility in Salem Township, Pennsylvania, owned by Talen Energy. CNBC reports that Amazon also purchased an adjacent, nuclear-powered data center campus from Talen for $650 million.
Big technology companies, which previously invested in wind and solar energy, now want nuclear energy that provides reliable power 24/7. To provide reliable power, wind, and solar power need extremely expensive batteries as backup that will store excess power generated by the wind and solar units and dispatch it when the wind does not blow or the sun does not shine. Not only are these batteries extremely expensive, but they require even more land than the sprawling acres that wind and solar require. According to Brookings, wind and solar generation require at least 10 times as much land per unit of power than coal- or natural gas-fired power plants, including land to produce and transport the fossil fuels, without even accounting for battery backup. Since land is limited and essential for the use and survival of humans as well as wildlife, the movement towards land-intensive wind and solar power presents future problems.
Nuclear Power in the United States
The United States has 94 active nuclear power reactors–more than any other country—providing almost 20% of the nation’s power. Only two new large-scale reactors, Units 3 and 4, have been built in recent decades at the Vogtle nuclear power plant in Georgia. Those units have run billions of dollars over budget and were years late due to onerous regulations and delays by the Nuclear Regulatory Commission, which has been making it difficult to build large-scale nuclear reactors in the United States. China, however, is building both large-scale and small modular nuclear reactors with 55 in operation and 26 under construction. France is also building large-scale nuclear reactors and generates more electricity from nuclear power than any other source.
Delays and budget overruns at the Vogtle nuclear power plant, along with a canceled project in South Carolina, have fueled negative perceptions of nuclear energy in the United States. Historically, Democrats have expressed opposition to new nuclear facilities, citing safety, environmental, and economic concerns. However, President Biden has recently signed legislation aimed at accelerating the development of new nuclear projects, acknowledging that wind and solar energy alone are not being deployed quickly or reliably enough to support the energy transition. The Atomic Energy Advancement Act instructs the Nuclear Regulatory Commission to streamline the approval process for new reactor designs, enhance hiring, lower application fees, offer financial incentives for innovative reactor types, and promote nuclear power development at sites of decommissioned coal plants.
Conclusion
The tech giants have stepped up their spending to meet the demand and potential they see for AI and are turning to nuclear power to supply the electricity needed to power those data centers as renewable energy is not reliable. The New York Times reports that the five largest tech companies, including Alphabet, Microsoft, and Amazon, spent a combined $59 billion on capital expenses in the last quarter, 63 percent more than a year earlier and they have signaled to investors they plan to keep spending. Despite that spending and the new law signed by President Biden to promote nuclear power, there is still a question as to whether big tech has enough influence to get the necessary regulatory approvals, and whether the culture of the Nuclear Regulatory Commission can truly change to have another nuclear renaissance in the United States as was seen under its predecessor organization, the Atomic Energy Commission.
