Can Big Tech revive nuclear power?

By Nico Portuondo | 10/28/2024 06:33 AM EDT

The multitrillion-dollar cloud computing industry is rolling the dice on old and new reactors.

Cooling towers at the Three Mile Island nuclear power plant in Middletown, Pennsylvania.

Cooling towers at the Three Mile Island nuclear power plant in Middletown, Pennsylvania. Matt Rourke/AP

Nuclear power, once seen as a relic of the 1970s and in steady retreat, is being revived by a tech industry in search of vast amounts of energy for artificial intelligence and the digital economy.

This month alone, cloud computing giants Google and Amazon struck lucrative deals with developers of advanced reactors to help power future data centers. That came after Microsoft last month signed onto a 20-year agreement to buy power from a retired unit of Constellation Energy’s Three Mile Island nuclear station in Pennsylvania, site of the worst nuclear accident in U.S. history in 1979.

Amazon plans to invest $500 million in several small modular reactor projects, including a large equity investment in developer X-energy.

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“From the perspective of data center operators, you need a highly reliable power supply that can also meet decarbonization commitments,” said Alan Ahn, deputy director for nuclear at Third Way. “For that need, there are not a lot of alternatives outside of nuclear.”

Despite the run of good news for old and new nuclear, lots of hurdles stand in the way of the technology industry’s push to revive nuclear power.

The details of Google’s deal to purchase power from nuclear startup Kairos Power and Microsoft’s plan to reopen Three Mile Island are unclear — including critical questions about cost overruns and potential exit terms if nuclear developers don’t meet deadlines.

Even with tech companies that have a combined market value of over $7 trillion putting their thumbs on the scale, supply chains, cost and the new technology itself weigh on the prospects for a nuclear revival.

Smaller advanced reactors are using different cooling systems than conventional plants, and the Nuclear Regulatory Commission has to sign off on safety assurances. The Department of Energy is providing billions of dollars to companies in a position to run demonstration projects for the advanced reactors. DOE has awarded developer TerraPower almost $2 billion for its Natrium project in Wyoming and X-energy about $1.2 billion for a demonstration of its Xe-100 reactor in Washington state.

“As has been the case with just about every kind of energy technology that we’ve ever worked with, getting these first-of-a-kind projects does require some support from the federal government,” said Jeff Navin, director of external affairs for TerraPower.

“The goal here is get the first one built, demonstrate that it works, bring the cost down, and let the private sector continue to make additional investments,” Navin said.

It can also be costly to restart a reactor after decommissioning. The Washington Post reported that Constellation Energy is pursuing a $1.6 billion federal loan guarantee to help pay for a restart of the shuttered unit of Three Mile Island.

And regulators in Texas and Ohio are already reaching agreements over utility rate designs to ensure the costs of infrastructure upgrades to power enormous data centers aren’t borne by regular utility customers.

A new paradigm

The search for large-scale energy guarantees by the cloud computing giants is catching much of the electricity industry off guard.

For more than a decade U.S. power demand has been almost flat. Now, grid operators that serve whole regions of the country and major utilities like NextEra Energy and American Electric Power are projecting record new demand for power through 2030.

The surge in demand comes in the midst of a historic energy transition. Low natural gas prices and new sources of cheap solar and wind generation have made burning coal and running nuclear stations uneconomic by comparison. Despite the optimism of industry advocates and efforts by Congress and states going back two decades to bolster nuclear, the high cost of building large modern reactors thwarted any prospect of a nuclear renaissance.

Meanwhile, climate regulations targeting carbon dioxide emissions from coal and gas are raising concern about where future power supplies will come from. Fossil fuel plants continue to shut down, and renewable energy is struggling to fill the void.

As a result, utility owners and technology companies are reconsidering nuclear power as they look for round-the-clock electricity that doesn’t add more heat-trapping emissions to the atmosphere.

Activists who have voiced concern about nuclear being a go-to option for zero-carbon electricity say they doubt Amazon’s investment will reverse the issues around nuclear.

“The path to safe and reliable commercial operation for any experimental nuclear technology is bound to be rocky, and it is virtually impossible today to estimate what the cost of power eventually will be,” said Edwin Lyman, nuclear power safety director for the Union of Concerned Scientists.

The risk, he says, will fall on taxpayers and ratepayers “who will no doubt be called upon to bail them out if they fail.”

The cost of new reactors of any size and nuclear waste concerns have yet to be solved, others noted.

Johanna Neumann of Environment America said claims that small modular reactors can come online in 2030 “stand in contrast to a long history of overhyped nuclear promises.”

“The climate clock is ticking and there is no time for false promises of technologies that might or might not show up on time,” Neumann said.

Bill Gates has a vision

Former Microsoft CEO Bill Gates connected the dots between technology’s energy demand and nuclear early on. He co-founded and has invested more than $1 billion on advanced nuclear developer TerraPower.

“He was spending money and exploring nuclear at a time that when literally no one else was and he was giving,” TerraPower’s Navin said. “He was hiring talent, empowering that talent, and letting them explore ideas to see what could come out of it.”

Other tech leaders are following Gates’ lead. Most notably, OpenAI founder Sam Altman backed the small modular reactor startup Oklo and subsequently became its chair. Oklo announced recently it is making progress on building its first reactor project after the Department of Energy signed off on the design for a fuel fabrication facility.

Bill Gates speaking this year.
Former Microsoft CEO Bill Gates has been bullish on nuclear energy as a way to address climate change. | Andres Kudacki/AP

Both X-energy and Kairos will also need a special type of fuel, known as high-assay low-enriched uranium (HALEU), that does not have a reliable commercial supplier outside Russia. President Joe Biden this year signed a ban on uranium imports from Russia.

DOE recently awarded a $2.7 billion uranium enrichment contract to domestic developers, but it remains unclear if those companies will be ready to supply the fuel in time for advanced reactors’ planned openings.

Gates himself has taken a stab at addressing the uranium supply issues. Last year, TerraPower signed memorandums of understanding with HALEU developers Centrus Energy and Framatome North America in an effort to secure a fuel supply in time for Terrapower’s advanced reactor planned opening date in 2030.

Congress has also taken up the mantle to reinvigorate the nuclear industry. It included $700 million in the Inflation Reduction Act for domestic uranium suppliers, as well as approving comprehensive legislation to accelerate reviews for next generation reactors.

Despite those efforts, systematic issues surrounding the nuclear industry have still led to disappointing results in recent years.

In the 2010s, high operating costs and expiring safety permits from the Nuclear Regulatory Commission were pushing large plants into decommissioning. In the past decade, seven nuclear reactors have been decommissioned in the U.S., while only two new ones have been switched on.

And even more recently, the nuclear industry’s attempts to push small, factory-built reactors as a possible lifeline appeared to be struggling, too. Late last year, developer NuScale Power and a group of electric utilities abandoned plans to build first-of-a-kind next-generation reactors near Idaho Falls, Idaho, because of cost and regulatory concerns.

Those concerns don’t seem to be deterring Big Tech companies such as Google and Microsoft from turning to nuclear.

Third Way’s Ahn said industry observers didn’t anticipate Big Tech’s groundbreaking nuclear investments, even as they were confident nuclear had to be part of the puzzle of energy solutions to climate pollution.

“The recent agreements are a massive statement to the public, a clear signal that these can be economic going forward and provide an obvious symbolic significance,” he said.