Nuclear power is poised for a comeback in the United States, thanks mostly to Big Tech’s increased demand for electricity to power data centers that underpin artificial intelligence (AI). As AI applications develop, tech organizations are looking for sustainable energy sources to meet the growing power demands of their data centers. Recent efforts by industrial titans demonstrate a tilt toward nuclear energy.
Microsoft, Google, and Amazon have taken considerable measures to include nuclear power into their energy mix. Microsoft has reached an agreement with Constellation Energy to restart a reactor at the historic Three Mile Island nuclear station. Google collaborated with Kairos Power to acquire electricity from small modular reactors (SMRs), while Amazon sponsored a $500 million fundraising round for X-electricity, another SMR startup.
Nuclear energy output in the United States has been stagnant for decades. Although there are presently 94 nuclear reactors in the country, their production has continuously contributed around 20% of the country’s power since the 1980s. For example, Georgia’s Vogtle power facility built additional reactors earlier this year, marking the first nuclear expansion in seven years. The primary reason for this delayed growth is the industry’s strict rules and safety requirements.
Big Tech’s interest in nuclear energy suggests a possible change. As AI technology advances, both semiconductor chips and enormous quantities of energy are required. This has sparked fresh interest in nuclear power as a dependable energy source. However, these expenditures are part of long-term plans, with facilities such as the Three Mile Island reactor not projected to be operational until 2028.
Small modular reactors (SMRs) are a promising technology that might revolutionize nuclear energy. SMRs attempt to duplicate the functions of bigger nuclear reactors on a smaller scale, perhaps resulting in cost savings and more flexibility. Despite its promise, SMRs remain in the experimental phase in the United States. Companies such as Kairos have gotten clearance to construct demonstration units, although the first operational SMRs are not expected until approximately 2030.
For investors, the nuclear energy business offers both possibilities and risks. While some firms, like as NuScale Power and Oklo, have already seen their stock values skyrocket, the technology remains mostly untested. This year, NuScale has grown by more than 450%, while Oklo, which went public earlier in 2024, has increased by almost 80%. These investments represent increased optimism about nuclear power, but there are concerns because SMRs are not yet completely matured.
The growing demand for power, particularly from data centers, has pushed utility firms’ stock values higher. Although nuclear energy is the primary emphasis, the overall increase in power consumption benefits the energy sector as a whole.
Uranium producers are an additional alternative for investors looking for nuclear-related prospects. Companies such as Uranium Energy and Cameco have experienced considerable growth in recent years, with their stock prices hitting near-record levels.
While nuclear power, particularly SMRs, is still in its early phases of development, large technology firms’ financial support demonstrates a strong commitment to greener energy options. As George Gianarikas, a renewable energy analyst at Canaccord Genuity, pointed out, the success of SMRs is far from certain, but further investment in this area may help make nuclear energy a reality.
Original source: Julie Hyman, Yahoo Finance, “The Next Big AI Trade Could Be Nuclear Power: Morning Brief,” October 18, 2024. You can check out the full article here.
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