Nuclear-powered AI: Big Tech’s bold solution or a pipedream?

Nuclear-energy startup Kairos Power, which intends to build about seven small reactors backed by Google, operates a manufacturing site in Albuquerque, N.M. Photo: Adria Malcolm for WSJ
Nuclear-energy startup Kairos Power, which intends to build about seven small reactors backed by Google, operates a manufacturing site in Albuquerque, N.M. Photo: Adria Malcolm for WSJ

Summary

Amazon, Google and Microsoft are investing billions in nuclear power, but the projects are years away and rely on unproven technology.

The tech industry is enamored with nuclear power, but for now it will lean heavily on fossil fuels to power its artificial-intelligence boom.

Amazon.com, Google and Microsoft each struck recent deals meant to bring more nuclear power online to satiate burgeoning energy demand tied to AI. They are betting billions of dollars that nuclear power can help curb surging carbon emissions tied to the data centers, which threaten their climate pledges.

Some of the projects depend on unproven next-generation technology, and each is slated to take years to complete, in part because of financial and technological challenges that have stymied the growth of the U.S. nuclear industry for decades.

In the meantime, utility companies and power providers need to burn fossil fuels to supply the power tech companies need. Some have proposed new natural-gas plants, which are faster and cheaper to build than nuclear reactors, while others have contemplated extending the lives of coal plants that had been slated for closure.

The tech giants years ago set ambitious goals to slash their carbon emissions by purchasing clean energy such as wind and solar power. The development of ChatGPT and other large language AI models, which consume enormous amounts of electricity, has upended those promises and set off a scramble among the companies to find more clean power. Large data centers can consume roughly the same amount of electricity as a midsize city.

The tech industry’s nuclear investment is something of a gamble. Historically, efforts to build nuclear-power plants in the U.S. have run billions of dollars over budget and taken years longer than expected. Few reactors have been built in recent decades.

A cooling tower at Three Mile Island, site of the worst U.S. nuclear-power accident. Constellation Energy and Microsoft plan to restart a reactor there. Photo: Heather Khalifa/Bloomberg News
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A cooling tower at Three Mile Island, site of the worst U.S. nuclear-power accident. Constellation Energy and Microsoft plan to restart a reactor there. Photo: Heather Khalifa/Bloomberg News

“It’s going to take some time to bend the curve and drive emissions downward," said Michael Terrell, senior director for energy and climate at Alphabet’s Google. “We’re committed to our goals, and we feel like we have a good path."

Tech companies have become the nation’s largest buyers of wind and solar power, but even when paired with lithium-ion batteries, those technologies alone can’t supply the nonstop electricity data centers require. The companies have lately been exploring other technologies that can potentially supply power around the clock.

Nuclear bonanza

Last week, Google announced the first deal in the U.S. supporting the commercial construction of small modular nuclear reactors, or SMRs, a developing technology aimed at avoiding some of the hurdles associated with building large nuclear-power plants. Under the deal’s terms, Google committed to backing about seven reactors to be built by nuclear-energy startup Kairos Power. The goal is to add 500 megawatts starting at the end of the decade.

Days later, Amazon said it had signed agreements with utilities in Virginia and the state of Washington to support the build-out of SMRs. It said it would also invest in X-energy, an SMR reactor and fuel developer whose technology Amazon said will be used in the Washington project.

Some tech companies are looking to repurpose existing reactors, or revive recently closed ones. Last month, Constellation Energy and Microsoft struck a deal to restart the undamaged reactor at Pennsylvania’s Three Mile Island, the site of the country’s worst nuclear-power accident. Microsoft has signed a 20-year power-purchase agreement with Constellation, which expects to spend about $1.6 billion to restart the reactor by early 2028.

An SMR has yet to be commercially deployed in the U.S. Proponents say their smaller designs, advanced technology and means of streamlining the construction process will help avoid the pitfalls of traditional nuclear projects. For example, adding two reactors at Georgia’s Vogtle nuclear plant, cost billions more and took years longer than expected.

Some small modular reactors are “not going solve anything in the 2020s," Matt Garman, the CEO of Amazon’s cloud-computing unit, said Monday at The Wall Street Journal’s Tech Live event. In the 2030s and beyond, “they could be an excellent source of energy."

X-energy Chief Executive J. Clay Sell said Amazon’s commitment would help X-energy develop the supply chain needed to build its first plant, and then refine the design and strategy for future ones.

“Ultimately, it allows us to get on a pathway to build these plants, wring out the risk of execution and wring out the risk of supply-chain performance," he said. “The policy, political and financial tailwinds for nuclear have become quite strong."

Sustainability versus speed

For tech companies, the stakes are high. Microsoft’s emissions rose 40% during the three years through June 2023, while Google’s surged nearly 50% in the four years through December. Materials and power for data centers were among the factors driving the increases.

Microsoft said it is committed to procuring more clean energy and reaching its goal of becoming carbon negative by 2030.

Sustainability commitments for the big tech companies are taking a back seat to the AI arms race, according to McKinsey. The consulting firm says the top challenge for data-center development cited by tech companies is power availability.

Tech companies are increasingly willing to build data centers that will be powered by natural-gas plants, according to investment bank Jefferies.

An Amazon Web Services data center in Virginia. Large data centers can consume roughly the same amount of electricity as a midsize city. Photo: Nathan Howard/Bloomberg News
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An Amazon Web Services data center in Virginia. Large data centers can consume roughly the same amount of electricity as a midsize city. Photo: Nathan Howard/Bloomberg News

Dominion Energy, a utility company that supplies electricity in Virginia, home to one of the largest data-center markets, expects power demand in its territory there to double by 2039.

Dominion last week filed with Virginia regulators a plan to meet the expected growth in demand by developing carbon-free electricity sources as well as new natural-gas-fired plants. The company called natural gas “critically important" in meeting the projected demand surge and said it could account for roughly 20% of added resources. Amazon has agreed to explore the development of an SMR project near one of Dominion’s existing nuclear plants.

“No single energy source, grid solution or energy-efficiency program will reliably serve the growing needs of our customers," said Ed Baine, president of Dominion Energy Virginia.

Google’s Terrell said the company has been working on ways to reduce data-center electricity consumption at times when the grid is strained. He said the company should become more involved in helping utilities find carbon-free ways to meet projected demand.

“Gas has just been the traditional way that utilities have met demand growth, and so we have to be looking at what are the new ways to do that," he said.

Tom Dotan contributed to this article.

Write to Katherine Blunt at katherine.blunt@wsj.com

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