Is Nuclear Energy Making a Comeback?
The past month has been spectacular for some of America’s nuclear Small Modular Reactors (SMR) developers. Oklo Inc. shares rose a staggering 192%, and NuScale Power shares rose 90%. The market rallied following tech companies’ commitment to investing in nuclear energy. But why would companies like Google and Amazon pour money into a sector they lack expertise in, especially nuclear energy?
Artificial Intelligence has been the hot topic this year, and it is expected to generate more than $200 billion in revenue in 2024 alone. However, many – such as Mark Zuckerberg – have notedpower demand as the biggest obstacle to the exponential growth of AI, with a query consuming up to 10 times the energy of a Google search. With the current push to move away from fossil fuels and the growing demand for electricity from the grid, Big Tech is looking at other ways to power its AI data centres, along with the help of renewables.
Nuclear energy seems to be the wave that tech giants want to ride. It produces low carbon emissions, promises to deliver lots of power for decades, and remains steady even when the wind dies down or the sunlight fades. In these efforts, Amazon has agreed to support the development of four SMRs, while Google agreed to buy power from six SMRs to be built by Kairos Power. Microsoft has also engaged in a 20-year power purchasing deal with Constellation Energy, reopening a nuclear unit at the Three Mile Island plant in Pennsylvania.
SMRs are advertised as smaller, safer, and more efficient alternatives to large-scale nuclear reactors. They can be built next to data centres, cutting costs and time in connecting them to the grid. Although existent in China and Russia, investors in the US have been worried about financing these projects, given the history of nuclear power plant development projects being late, expensive and over budget. Another important issue is safety. While SMRs are deemed safer, the widespread impacts of Chornobyl and Fukushima must be considered. It is crucial not to rush these projects and enforce tight regulations to prevent a disaster. The director of nuclear power safety emphasised that deploying a new generation of technology with “untested designs” may take much longer than the target dates of 2030 and beyond. Many have noted that no SMR has yet begun construction and that there isexcessive excitement over the news.
However, SMR developers believe that the tech giants’ support is just what they need to get things going. Most investment into nuclear energy has been from the federal government, pouring billions of dollars into programmes. The latest developments represent a marked shift with big tech and major banks funding these projects. For instance, Citi and Goldman Sachs stated they will support the goal of tripling nuclear energy capacity by 2050. On the other side of the Atlantic, before the UN climate summit, EU ministers have approved support for nuclear energy in a call to accelerate “low emissions technologies”. The UK will also be building a new nuclear power plant, Sizewell C, sometime in the future, although it is facing delays relating to funding.
While the tech giant’s investment in SMRs demonstrates the scepticism in renewables and batteries to provide enough stable and cost-effective power as an alternative to fossil fuels, it won’t be a viable solution until before 2030. Big Tech must continue to rely on and invest in wind and solar energy to meet the demand for new data centres. In the first half of 2024, new data centres were built, totalling nearly 24 Gigawatts. This is enough to power 63 million homes, highlighting the importance of reinforcing the energy grid while de-escalating the use of fossil fuels. Nuclear energy may be the solution the US is looking for. It will, however, take a while to get there.
By: Omar Vasconcelos
