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22
2025
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AI Data Centers Bet on Next-Gen Nuclear
Many start-ups in the United States and Europe are vying to become the first to not only design but also put into commercial operation the next generation of advanced nuclear reactors. The small modular reactors (SMR) are believed to be simpler and cheaper to build and install. Because of their smaller size, it is possible to install SMRs on sites that are not suitable for bigger reactors. They are also significantly cheaper and faster to build than conventional reactors and can be constructed incrementally to meet the growing energy demand of a site. Nuclear Renaissance Despite promising advances in recent years, no one has actually launched such a micro reactor yet. However, the race has accelerated as technology giants are looking to power and cool their data centers, preferably with low-carbon energy. Renewables plus battery storage cannot meet all the growth in demand, so nuclear power has become the next best thing for Big Tech who are looking to boast AI advancements and climate commitments at the same time. The problem is that conventional nuclear reactors and sites take years, often decades, to fund and build. One mothballed reactor is being restarted in the U.S., thanks to a power purchase agreement that giant Microsoft has signed. Last year, Constellation Energy, the biggest owner of U.S. nuclear power plants, signed its largest-ever power purchase agreement with Microsoft, which paves the way for the restart of the Three Mile Island Unit 1 nuclear plant. The tech industry, however, cannot rely on PPAs from operational nuclear reactors to cover the energy needs of their new data centers. That’s why Big Tech is investing in the start-ups that are developing smaller-scale modular reactors. Big Tech Backs Advanced Nuclear Technology Amazon, for example, invested in a financing round of approximately $500 million, which X-Energy Reactor Company raised last year. X-Energy continues to raise financing to complete its reactor design and licensing as well as the first phase of its TRISO-X fuel fabrication facility in Oak Ridge, Tennessee. The Amazon funding will support future carbon-free projects that will use X-energy’s Xe-100 advanced SMRs. Related: Kazakh Oil Output Hits Record High “We need smart solutions that can help us meet growing energy demands while also addressing climate change,” said Kevin Miller, Amazon’s Vice President of Global Data Centers. Earlier this month, X-Energy said that the upsized $700 million financing round would help it advance its technology development. Amazon and X-energy are collaborating to bring more than 5 gigawatts (GW) of new power projects online across the U.S. by 2039. Another tech giant, Google, signed in October 2024 the world’s first corporate agreement to purchase nuclear energy from multiple small modular reactors to be developed by Kairos Power. “This agreement is part of our efforts to develop and commercialize a broad portfolio of advanced clean electricity technologies to power our global data centers and offices,” Michael Terrell, Senior Director, Energy and Climate, at Google said. In the race to commercialize the first small modular reactors, developers globally have raised at least $1.5 billion in funding over the past year to advance their technologies and projects, according to estimates by the Financial Times. Race Heats Up The funding rounds, in many cases backed by the technology giants, add to government support for nuclear technologies in the U.S. and Europe. While the Trump Administration is skeptical about supporting renewables such as solar and wind, and especially offshore wind, the Department of Energy strongly backs nuclear power development. Secretary of Energy Chris Wright said earlier this month that DOE would “work diligently and creatively to enable the rapid deployment and export of next-generation nuclear technology.” The funding and the support are lining up for developers of small advanced reactors. However start-ups will need much more financing to commercialize the various advanced nuclear technologies they are currently designing. The hope is that at some point in the 2030s, the world will have its first operational small modular reactor. Developers and backers also hope that SMRs will not suffer the fate of many conventional nuclear projects of recent years, which have seen huge cost overruns and have been years behind schedule. Nuclear Power To Help Meet The AI Power Demand A lot of nuclear energy will be needed in the coming years as data center demand is soaring. Nuclear power will be one of the most important new energy infrastructure that the world will need to meet the electricity demand from AI, Goldman Sachs said in a report last month. “But nuclear can’t meet all of the increased data-center power needs. Natural gas, renewables, and battery technology will also have a role to play,” Goldman Sachs Research said. The Wall Street bank forecasts 85-90 GW of new nuclear capacity would be needed to meet all of the data center power demand growth expected by 2030, relative to 2023. But well less than 10% of this capacity will be available globally by 2030. That’s why natural gas will stay in the mix, especially in the U.S., while battery storage capacity is also expected to surge to back up solar and wind power in unfavorable weather conditions, according to Goldman Sachs. By Tsvetana Paraskova for Oilprice.com
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Soaring demand for electricity to power the AI boom is creating a global rush to develop small modular reactors to meet the growing energy needs of the Big Tech firms with electricity that’s both reliable and low-carbon.