Artificial intelligence has driven the stocks of tech companies like Microsoft (MSFT), Amazon (AMZN), Nvidia (NVDA), and Google (GOOG, GOOGL) to new highs this year. But the technology that companies promise will revolutionize our lives is driving up another factor just as much as stock prices: energy consumption.
AI data centers use large amounts of electricity and could increase energy demand by up to 20% over the next decade, a Department of Energy spokesperson said. This, combined with the continued growth of the broader cloud computing market, creates an energy squeeze.
However, Big Tech companies have also set ambitious sustainability goals focused on the use of low- and zero-carbon resources to reduce their impact on climate change. While renewable energy like solar and wind are certainly part of the equation, technology companies need uninterruptible power supplies. And for that reason, they are leaning towards nuclear power.
Big technology companies aren’t just planning to move into existing plants either. They are working with energy companies to bring idle facilities like Three Mile Island, Pennsylvania, back into service and to bring small modular nuclear reactors (SMRs), which take up less space and are cheaper to build than traditional plants, to bring them back online. ).
But there are still many questions about whether these investments in nuclear energy will pay off, not to mention how long it will take to build a new reactor.
Although solar and wind power projects provide clean energy, they are still not the best option for continuous power supply. That’s where nuclear energy comes in, experts say.
Aerial photo of the construction site of Linglong-1 (ACP-100), the world’s first land-based commercial small modular reactor (SMR), in Hainan Province, China, on July 4, 2024. (Wang Jian/VCG via Getty Images) · VCG via Getty Images
“Nuclear energy is virtually carbon-free,” explains Ed Anderson, distinguished vice president and analyst at Gartner. “So if they need energy and they need green energy, this becomes a natural choice. Nuclear [power] It’s a good option for that. ”
The United States currently generates most of its electricity through natural gas plants that emit greenhouse gases. As of 2023, nuclear power plants produced slightly more electricity than coal or solar power plants.
Last week, Google signed a deal to buy power from Kairos Power’s small modular nuclear reactors, with Google expecting the first reactor to be operational by 2030 and the power plant to power Google’s data centers. It said it would be deployed in the region, but Kairos did not provide exact information. place.
Just two days later, Amazon announced it was investing in Energy Northwest, X Energy, and Dominion Energy to develop SMRs. The plan is for Energy Northwest to build the SMR using technology from X Energy in Washington state, and for Amazon and Dominion Energy to build the SMR near Dominion’s current North Anna power plant in Virginia. We are considering it.
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Last month, Microsoft signed a 20-year power purchase agreement with Constellation Energy, under which the company will source energy from one of Constellation’s previously decommissioned nuclear reactors on Three Mile Island by 2028. It will be.
At Three Mile Island, the other reactor suffered a meltdown in 1979, but the Nuclear Regulatory Commission said the reactor itself did not allow much of the dangerous radiation to escape, causing severe damage to nearby people, plants and animals. There was no significant impact.
In 2023, Microsoft announced that it would source electricity from Helion, a fusion startup chaired by Sam Altman, by 2028. Mr. Altman is also the chairman of Oklo, a nuclear fission company that plans to build a micro-reactor facility in Idaho. Nuclear fusion is a long-explored process of combining atoms to generate electricity without using dangerous nuclear waste. Currently, commercial uses of such plants do not exist.
Microsoft founder Bill Gates also founded and is currently chairman of TerraPower, a company working on developing advanced nuclear power plants at a facility in Wyoming.
Nuclear power output has been stagnant for many years. Since 1990, nuclear power has contributed about 20% of U.S. electricity generation, said Chris Higginbotham, a spokesman for the U.S. Energy Information Administration.
Part of the reason has to do with the fear of meltdowns, such as the Three Mile Island meltdown, Chernobyl in Ukraine in 1986, and Japan’s Fukushima Daiichi nuclear power plant meltdown in 2011. .
According to the Nuclear Regulatory Commission, Chernobyl was the worst meltdown in history, spreading radioactive contamination to regions of Ukraine, the Russian Federation and Belarus, and resulting in thousands of children drinking milk contaminated with radioactive iodine. had developed thyroid cancer.
Factory workers and emergency personnel were also exposed to high levels of radiation at the scene. The Fukushima nuclear power plant suffered multiple meltdowns as a result of the massive earthquake and subsequent tsunami, severely damaging three of the plant’s six reactors.
Aerial view of the Three Mile Island Nuclear Power Plant. (Chip Somodevilla/Getty Images) · Chip Somodevilla via Getty Images
However, according to the United Nations Scientific Committee on the Effects of Atomic Radiation (UNSCEAR), as of 2021, “no adverse health effects in Fukushima residents that can be directly attributed to radiation exposure due to the accident have been recorded.”
Outside of recognition, nuclear power plants are expensive and slow to build.
Georgia Power’s two Vogtle reactors are scheduled to come online in 2023 and 2024 after years of delays and billions of dollars in cost overruns. The reactors, known as Units 3 and 4, were originally scheduled for completion in 2017 at a cost of $14 billion, but Unit 2 only began commercial operation in April of this year. The final price tag for the piece is estimated to reach $31 billion, according to the Associated Press.
The explosion of cheap energy from natural gas is also making it difficult for nuclear power plants to compete economically. Nuclear companies now expect SMR to lead the way in building new nuclear energy capacity. But don’t expect them to start appearing for a while.
“The SMR discussion has been a very long one,” Paul Zimbardo, managing director and research analyst at Jefferies, told Yahoo Finance. “I think almost all predictions are for the 2030s. Amazon, Google, some standalone SMR developers are saying 2030 to 2035, and some of the power companies are saying that as well.”
Additionally, Zimbardo said the power generated by SMRs is expected to be much more expensive than traditional power plants, not to mention wind and solar projects.
Google Data Center Southland seen from above in Council Bluffs, Iowa, USA on January 4, 2019. REUTERS/Brian Snyder · REUTERS / Reuters
“Some of the projections are well over $100 per megawatt hour,” Zimbardo explained. “To put it into context, the cost profile for an existing nuclear power plant is about $30 per megawatt hour.New wind and solar construction costs around $30 per megawatt hour, depending on where you are in the country. , or as low as $60 to $80 per megawatt hour. So this is a very expensive solution.”
Not everyone believes in the promise of SMR. Edwin Lyman, director of nuclear safety for the Union of Concerned Scientists, says small reactors are an untested technology.
“For all the brain power that these tech companies have, I don’t think they’re doing a proper valuation,” Reiman told Yahoo Finance. “Or we’re going to entertain this as a kind of sideshow to get all the foundations in place to handle this expected massive expansion and data center demand.”
Lyman also challenges the idea that SMRs can get up and running quickly and begin providing low-cost, reliable power around the clock.
“The historical development of nuclear power has shown that it is a very rigorous technology, requiring time and effort, significant funds and patience.” “So I think the nuclear industry is trying to make itself relevant despite its recent failure to meet cost and timeliness goals.”
Still, as tech companies promise an AI revolution that will require power-hungry data centers, nuclear power remains the only viable green option until solar and wind power take over for good. It could be an option.
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Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter @Daniel Howley.
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