Big Tech embracing nuclear energy to power data centres

To advance their AI ambitions, Microsoft, Google and Amazon are turning to nuclear power, and have reportedly struck individual deals with operators and developers of nuclear power plants to fuel the boom in data centres.

The demand has surged due to the substantial investments that these and other tech companies have made in AI, which consumes significantly more energy than traditional technology sectors.

According to reports, Microsoft has reached an agreement to compensate an energy firm for the restoration of the closed Three Mile Island nuclear power plant in Pennsylvania. Meanwhile, Amazon and Google have announced their commitment to developing a new generation of small modular reactors.

While this technology has yet to be successfully commercialized, energy experts suggest it could be more cost-effective and simpler to construct compared to the large nuclear reactors the U.S. has been building since the 1950s.

Big tech companies, which once heavily invested in wind and solar energy, are now shifting their focus to nuclear power. They seek a reliable energy source that can provide continuous power without emitting greenhouse gases.

While wind and solar energy are environmentally friendly, they are not consistently available. The biggest tech firms have committed to using emissions-free energy for their operations by 2030, but these pledges were made prior to the surge in AI demand, which requires significantly more energy.

Aneesh Prabhu, Managing Director at S&P Global Ratings, believes these big tech majors have a desire to grow all this in a sustainable way, and at the moment the best answer is nuclear.

Google, on Monday, said that it has reached an agreement to buy nuclear energy from small modular reactors being developed by a startup named Kairos Power, anticipating that the first units will be operational by 2030.

Then on Wednesday, Amazon revealed plans to invest in the development of small modular reactors by another startup, X-Energy. Last month, Microsoft disclosed its partnership with Constellation Energy to restore a reactor at Three Mile Island.

According to Prabhu, the construction cost for small modular reactors could be approximately $1 billion each.