Big Tech Is Going Nuclear (10/17/2024)
Amazon and Google announced major investments in advanced reactor companies, but the US government remains the industry's most important partner
The quiet but growing wave of nuclear industrialization in America gained major backers in Silicon Valley this week.
Amazon is investing $500 million in X-Energy, a Maryland-based reactor developer building SMRs, or Small Modular Reactors. SMRs are a class of nuclear reactor that is smaller than old reactors, has parts built in factories, and integrates advanced safety features. University of Michigan, Ares Mangement Corp, Amazon Climate Fund, and others joined in the investment round.
The news arrives a day after Google committed to purchase $500 million of electricity from Kairos Power, another nuclear startup, to power its data centers. Data centers represent about 3% of the US electricity demand and the share is expected to grow to 8% by the end of the decade.
Generative AI is propelling that growth. By some estimates, each query to ChatGPT takes as much as 10x as much electricity as a traditional Google Search. Over the last decade, total electricity usage in the US has been roughly flat. But demand for electricity is set to surge as society “electrifies everything” from cars to stovetops, and tech companies demand more to power AI, crypto, and cloud services. At the same time, companies, states and national governments have set climate “net-zero” goals. (Nuclear power is carbon-emissions free).
Microsoft, not to be left out of the party, has committed $800 million to Constellation Energy, allowing it to reopen a closed Three Mile Island nuclear plant. (The plant being reopened is safely next door to the one which partially melted down in 1979.) Constellation, financially backed by Microsoft, seeks to offload project risk by pursuing a loan-guarantee of $1.8 billion from the federal government. They plan to upgrade and reopen the old reactor by 2028, and supply electricity to Microsoft data centers until 2048.
The fleet of roughly 100 existing nuclear power plants had initial lifespans of 40 to 60 years, but many have now been extended to 80 to 100 years. Reactors are eligible for multiple 20-year extensions, which can be authorized by the Nuclear Regulatory Commission after inspections, scrutiny, and several thousand pages of paperwork. But the nuclear fleet’s retirement is coming.
Tech companies, reliably on brand, are looking the future: SMRs and their smaller cousins, microreactors, are paradigmatically different from large-scale nuclear power plants. The idea (and it is mostly an idea at this stage) is that nuclear reactors should be built like airplanes, not airports. Products, not projects. With factory production, learning lessons and improvements can be implemented in-house, and reactor builders can drive their costs down to be competitive with fossil fuel sources. But this is a big leap for the nuclear industry, which is currently geared around airport-like mega projects that require massive civil works and local government and utility partners. The supply chain of the nuclear industry—and its regulations—have to be redesigned. This transition costs billions of dollars and will require sustained support across government administrations.
The tech companies’ patronage of advanced, manufactured nuclear is thus a remarkable domino to drop. It signals a much greater chance the nuclear industry successfully shifts into a product paradigm.
Amazon is making an equity investment in X-Energy. Google is clearing a path for Kairos to get from non-nuclear tests, currently underway, to building its first six nuclear reactors. And Microsoft is supporting a broad portfolio of nuclear investments, from reopening shuttered reactors to investing in far-fetched but potentially groundbreaking fusion reactors.
Tech companies are not the only ones paying for this nuclear industry realignment. It’s also the American taxpayer. X-Energy ($1.1 billion over 10 years) and Kairos ($303 million over 7 years) are both beneficiaries of the Department of Energy’s Advanced Reactor Demonstration Project. It’s notable that the two reactor developers selected by Amazon and Google were first tapped by DoE. While it may eventually be possible to build nuclear reactors with private funding alone, today, the first step to success in the field remains a firm handshake with the United States government.