Tech Giants Go Nuclear To Power AI

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THE HOTTEST THING IN TECH
AI Giants Turn To The Nuclear Option To Power AI

On Thursday, the price of Brent crude registered its biggest weekly gain in over a year as the market appeared to factor in the risk of a growing Middle East conflict. In this energy-scarce environment, the rapid rise in power demand to power AI data centers has sparked a controversy. However, it has also prompted renewed interest in nuclear fission power. For example Microsoft signed a deal to help reopen Three Mile Island to access carbon-free energy to fuel their AI data centers. Nuclear power looks set to play an increasing role in the age of AI, creating investment opportunities.

The Hard Data

Data centers are a reason US electricity use is rising after about 15 static years. Data centers account for ~4% of US power demand today, and are projected to use 6% by 2026. McKinsey projects the vertical accounting for 11%-12% in 2030. But Rhodium Group director Jeffery Jones estimates AI is around 5%-10% of U.S. data center power use today. Hyperscale data centers, like those Microsoft, Google, and Amazon operate — and that startups like OpenAI and Anthropic rely on — are the primary culprit, responsible for 60% to 70% of all data center energy use, according to EPRI.

Additionally, the carbon footprint of most US data centers isn’t ideal. Despite an essay in September by Sam Altman claiming AI will usher in an idyllic “Intelligence Age,” thus “fixing the climate”, fossil fuels still generate ~60% of US electricity. Both Microsoft and Google’s carbon emissions have ballooned 40%-50% over the last four years, as a result of their expanding data center operations. And that’s their version. There are allegations of massive discrepancies between Big Tech's reported data center emissions and the reality of their "location-based emissions." 

Tech Giants Turn to The Nuclear Option

Nuclear power plants are seen as offering clean, consistent and reliable energy, operating at maximum capacity over 90% of the time, a crucial factor for data centers.

For this reason Altman himself recently met with White House officials to make the case for building massive AI data centers, which could require the equivalent of five dedicated nuclear reactors to run. He also happens to be a founder and major investor in a couple of nuclear energy projects, including fission technology and nuclear fuel recycling company, Oklo. 

In a landmark deal a couple of weeks ago, Microsoft announced a 20-year agreement with Constellation to purchase power from the dormant Three Mile Island nuclear fission power plant in Pennsylvania, with the goal of restarting the facility by 2028 to power its AI data centers. As part of its commitment to becoming carbon negative by 2030, Microsoft is actively seeking carbon-free energy sources to power its energy-intensive data centers. Bill Gates co-founded the nuclear company TerraPower, and has personally invested over $1 billion in the company

In March, the DOE announced a $1.52B loan to help Holtec restore the shuttered the 800-megawatt Palisades nuclear power station, the first such federal support to reopen a plant. Holtec aims to get it online by the end of next year and it should power up to 800,000 homes and create 600 union jobs.

Amazon also recently paid $650M to secure power from the sixth largest nuclear facility in the US for its new hyperscale data center, and is hiring a nuclear engineer to help AWS develop and acquire nuclear power. Google is also considering procuring nuclear energy for its data centers as part of its sustainability plans.

Reviving a Controversial Power Source

The decision to restart Three Mile Island, the site of the worst nuclear accident in U.S. history in 1979, has reignited concerns about the safety and feasibility of nuclear plants. Regulators and companies will likely face a challenge in reassuring the public (especially locals) given the impact of such past incidents on the image of nuclear power. Last year, a coalition of 115 organizations sent a letter to the Energy Secretary urging the DOE to reject funding requests from Holtec. 

However, advocates are quick to point to major advances in both safer nuclear fuel sources and safety systems tech. The Biden administration's push for clean energy, coupled with the tech industry's demand for reliable power, has spurred investment in next-generation nuclear technologies, including small modular reactors (SMRs). Startups like Oklo are developing SMRs, fuel recycling and researching less volitile fuel alternatives to provide safer and more efficient nuclear power solutions. 

Challenges For Nuclear Energy

Restarting a decommissioned plant like Three Mile Island involves a complex and lengthy process of licensing, oversight, and environmental assessments. The Nuclear Regulatory Commission (NRC) requires rigorous safety checks and infrastructure inspections to ensure the plant's safe operation. 

One problem is the US nuclear industry historically relied heavily on Russia for uranium enrichment services, as the major global supplier. Efforts are underway to bolster domestic uranium enrichment capabilities and find alternative fuel sources.

Another challenge is the growing competition from renewable energy sources as steadily falling costs make them increasingly competitive. Additionally, the development of better energy storage solutions like Tesla’s newly unveiled Dry Cathode batteries could further enhance the reliability and viability of renewables.

Conclusion

The future of nuclear fission power depends on a complex array of factors, including technological advancements, economic viability, public acceptance, and government policies. In the near term, restarting old fission power plants may help tech companies keep up with growing power demand while minimizing climate impact. But, eventually, cloud and AI companies will need alternative sources. Whether they turn to nuclear fusion or renewables – and how soon these are seen as a reliable alternative – will likely have a big impact on funding for the fission energy industry and will strongly impact the performance of in fission investments.

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