Big tech companies are driving a nuclear resurgence, bringing
shuttered facilities like 3 Mile Island back online and
announcing plans to build small modular reactors.
The new data centres being built today require so much
electricity that national power grids can't keep up with them.
Tech firms have worked out that they need to source their own
power if they're going to build the kind of data centres that
will make them competitive in AI.
The amount of power generated globally by nuclear power plants
peaked in 2006, with new plant construction stagnating in the
1990s. The 2011 Fukushima disaster in
Japan led to cancelled projects around the world.
In Germany, Angela Merkel, a trained physicist, announced
that Germany would phase out nuclear power, and Siemens
announced that they would withdraw entirely from the
nuclear industry to focus on renewables.
For a while, it seemed that Iran and North Korea were the only
countries with a suspicious interest in building new nuclear
power stations. In most of the rest of the
world, projects were delayed or cancelled due to public safety
concerns, regulatory hurdles, financing obstacles and fuel
bottlenecks. It's not just the fear of
disaster that slowed down nuclear energy, however.
The global demand for electricity grew by just two
point 2% in 2023, which was slightly less than the 2.4%
growth seen the prior year. While there had been strong
growth in China, India, and the developing world, advanced
economy showed substantial declines in their need for new
power stations. For much of the 20th century,
America's electricity demand had grown steadily and utilities
built power stations to keep up with the growing demand.
Starting in the mid 2000's, the demand for additional capacity
in the developed world flattened out while the US economy and
population continued to grow and while we continued to add new
electrical devices to our homes, factories, light bulbs, TV's,
computers and home appliances all became more and more energy
efficient, meaning that there was no real need to build new
generation capacity. The growth of data centers over
the last few years, driven by working from home,
cryptocurrency mining and now AI, boosted demand for
electricity. As a side note, working from
home which increased the need for data centres also reduced
the amount of power being used overall as the server racks at
data centres are more energy efficient than the office based
servers which businesses had relied on in the past.
Other changes however, like the roll out of electric vehicles in
recent years and plans to reassure the semiconductor
industry, further boost the demand for electricity in
advanced economies. Big tech companies like
Microsoft, Amazon and Google are driving the nuclear revival as
to get new power hungry data centres built in the United
States and Europe, they have to solve the problem of power
generation. Their net 0 pledges mean that
the sources of power that they've pledged to use have to
be low carbon, and they've already invested heavily in wind
and solar, but their data centres still need a steady base
load. So for big Tech, investing in
nuclear energy makes a lot of sense.
If we look at the pledges that big tech firms have made, almost
all of them have promised to reach net 0 carbon emissions by
2040. These pledges often involve
transitioning to renewable energy sources, investing in
carbon capture technology, and optimizing their operations and
supply chains for reduced energy consumption.
Their pledges are somewhat believable, as they they're so
profitable that they can actually afford to do this,
unlike smaller, less profitable businesses.
At the most extreme end of the scale, Microsoft pledged almost
five years ago to be carbon negative by 20-30, additionally
promising that by 2050 they will have entirely stripped all of
the carbon they emitted over the life of the firm from the
environment. As difficult as that goal will
have sounded in 2020, it's only gotten more difficult over time
thanks to AI. Microsoft now says that they
expect to consume five to six times more electricity than they
had planned on when they first made that promise, but they are
still sticking to their goal. The reason for the huge step up
in energy consumption is that AI consumes an awful lot of power.
A ChatGPT query, for example, uses.
This is about 10 times as much power to process as a simple
Google search does, and generating a single AI image
consumes the same amount of energy as fully charging a
smartphone. Microsoft revealed earlier this
year that it's carbon emissions have increased by 30% since
2020, so they're well off target.
The data centres being planned or built today consume more
power than can be bought from utilities, and so if Big Tech
wants a lot of 0 carbon power, their only realistic option is
nuclear power. Three Mile Island in
Pennsylvania was the scene of the worst commercial nuclear
accident in U.S. history, when a cooling malfunction in 1979
caused part of the core to melt in reactor 2, releasing
radioactive gases and radioactive iodine into the
environment. Schools near the reactor were
quickly closed, pregnant women and small children were
evacuated from the area, and residents were urged to stay
indoors. Within a few days, 140,000
people left the area. In the aftermath, an
investigation found that the average radiation dose to people
living within 10 miles of the plant was about equal to that of
a chest X-ray. Further studies found that the
accident had no observable long term health effects on those
living near the plant. Nevertheless, it was a big
scare. The Three Mile Island accident
was a turning point in the growth of of nuclear power.
Prior to the incident, the number of reactors under
construction globally had grown steadily almost every year, but
following the event, 52 plant nuclear reactors were cancelled
in the United States alone. At the time of the incident, 129
nuclear power plants had been approved for construction
worldwide, but of those only 53 were completed.
The Chernobyl disaster in northern Ukraine seven years
later had an even bigger impact on public and political
attitudes towards the safety of nuclear power and ended the
growth in active reactors globally.
Last month it was announced that Constellation Energy will reopen
a nuclear plant, a Three Mile Island, to provide power to
Microsoft's data centres. The plant being reopened is Unit
1, which was just decommissioned five years ago, and Unit 2,
where the accident occurred in 1979, will still remain closed.
The recommission plant at Three Mile Island will provide more
than 800 megawatts of power, all of which has been bought by
Microsoft from Constellation Energy under a 20 year power
purchase agreement. The plant is expected to be
brought online in 2028 and to run until at least 2054.
The location of the data centres that will use the electricity
has not yet been announced. Constellation says that the deal
will create more than 3000 jobs, add $16 billion to Pennsylvania
GDP, and bring in at least $3 billion in state and federal
taxes while providing safe, reliable, carbon free
electricity that helps reduce emissions.
Not to be outdone, Amazon last week announced that they would
be spending more than $500 million to support development
of four next generation small modular reactors.
They took a stake in X Energy and SMR Developer Google
additionally agreed to buy 500 megawatts of power from six to
seven small modular reactors, which will be built by Cairo's
Power. None of these companies revealed
the financial details of the agreements or where in the US
the plants will be built. The idea behind small modular
reactors, known as SMRS, is that the components of each unit can
be small enough to be mass produced on an assembly line,
making them cheaper to manufacture than full size
reactors. Each power plant could start
with just one reactor and add more as needed.
SMRS can, in theory, be cited in locations not suitable for
larger nuclear power plants. the US Department of Energy defines
SMRS as advanced nuclear reactors with a power capacity
of up to 300 megawatts per unit, which is about 1/3 of the
generating capacity of traditional nuclear power
reactors. Rolls Royce's SMR design
generates 470 megawatts, which is actually bigger than many of
the 1st generation nuclear reactors that were built in the
UK. According to Goldman Sachs data
center, power demands will grow 160% between now and 2030.
They say that when this is combined with the
electrification of transport and the reassuring of manufacturing,
electricity demand can be expected to double.
Since 2021, American companies have announced plans to spend
more than $500 billion on factories for semiconductors,
batteries, solar panels and more.
As great as this sounds, there's not sufficient generating
capacity to power all of these factories today.
The climate author Solomon Goldstein Rose argued in a 2001
Ted talk that while the world is on track to replace all fossil
fuel power plants by 2050, that this would not be good enough as
we're likely to need five times more power in 2050 as we use
today if the world is actually switching to electric vehicles,
Electric heating and electrifying various industrial
processes like steel making and concrete manufacturing.
He points out that over 700 million people today have no
access to electricity worldwide, and that billions more have
access to only small amounts of intermittent power, and that
providing these people access to energy would lift them out of
poverty. His estimate of needing five
times as much power came before these AI data centres were being
built. Nuclear power is well suited to
data centres because it provides a reliable source of power
around the clock, unlike wind and solar.
There are a few excellent YouTube videos by Practical
Engineering explaining the importance of a base load on
power grids and why it's much harder than you would expect to
connect solar and wind power to our existing electrical grids.
I was surprised to learn that many grid tight solar systems
shut down whenever the grid goes down, which is not really what
you would want. This happens both for the safety
of utility workers and because many of the inverters are grid
following inverters which need to sense the voltage of the grid
so that they can synchronize their output to match the grids
frequency and phase. A more obvious barrier to a 100%
wind and solar grid is the intermittency of these power
sources. The wind doesn't always blow and
the sun doesn't always shine. On top of that, the windiest and
sunniest places are not all that close to most major population
centers. Grid scale battery backup has
been put forth as a solution to this problem, but it's by no
means a perfect solution either, as rapid cycling degrades the
lifespan of utility scale batteries.
A 2021 wind drought in Europe meant that windmills generated
significantly less electricity than was expected, sending power
prices to record highs as utilities had to scramble to
find alternative fossil fuel power sources.
This map shows the potential for solar power in different parts
of the world, and you'll notice that Canada and Western Europe
are particularly I'll suited to solar generation.
British businesses, as an example, already face the
highest energy costs in the developed world, and if the new
government is hoping to boost growth, dealing with the weak
energy infrastructure might be a good start.
Unfortunately, Britain is not only I'll suited for solar and
wind generation, it's also the most expensive place in the
world to build a new nuclear power station.
According to Sam Dimitro Hinckley, Point C, which is
currently being built, will cost six times more to build per MW
than it's South Korean equivalent.
France and Finland, which used the same reactor design, managed
to build them for about 50% less per MW.
South Korea have kept their costs lower by building fleets
of reactors benefiting from economies of scale.
The same reactors is being built in the UK, is cheaper to build
in Finland and France because of a simpler approvals process.
UK rate regulations require a more complex planning process
and requested 7000 changes to the original design, essentially
making it entirely bespoke. One of the alterations required
to make it through the planning process involves spending 10s of
millions of pounds on underwater loud speakers to scare fish away
from the cooling intake. This fish disco is not required
in other countries. Even outside the UK, nuclear
power can be extremely expensive and time consuming to build.
It's much more expensive than wind or solar.
And while the climate case for nuclear power is strong, the
challenge of safely storing nuclear waste has not been
entirely resolved. There is, of course, plenty of
controversy over whether nuclear power can be considered clean
energy or not, mostly driven by concerns around nuclear waste,
nuclear weapon proliferation, and the risk of accidents.
A number of studies show that coal power plants output more
radiation than nuclear power plants do.
The fly ash emitted when burning coal for electricity carries 100
times more radiation than a nuclear power plant producing
the same amount of power. According to the US Office of
Nuclear Energy, the use of nuclear power in the United
States has reduced CO2 emissions, equivalent to
removing 100 million cars from the road, and nuclear power
plants produce more electricity on less land than any other
clean energy source. They say that all of the used
nuclear fuel produced by the US nuclear energy industry could
fit on an American football field at a depth of less than 3
yards. Because this video is about AI
and energy, I thought it might make sense to use Microsoft
Copilot to convert those measurements into something more
understandable for an international audience.
And I'm not actually joking. It came back with the reply that
this volume is equivalent to 18 Olympic sized swimming pools
filled up with Tesla's. So yeah, it's a big box, I
guess. The US Office of Nuclear Energy
goes on to say in their report that a lot of that waste could
be reprocessed and recycled and that many of the new reactor
designs can operate on used fuel.
Now there are not enough decommissioned nuclear reactors
like 3 Mile Island for Big Tech to resurrect, but they have
shown a growing interest in using small modular reactors.
The problem with that is that there are only three operational
SM Rs in the world today, one in China, one in Russia, and 1:00
in India. Three more are under
construction and 65 are still in the design stage.
GE, Vernova, Rolls Royce and Westinghouse all have SMR
designs, as do a long list of startups like the Bill Gates
backed Terror Power, which broke ground on its first plant in
Wyoming this summer, X Energy, which is backed by Amazon, and
Oaklow, which counts Sam Altman of Open AI among its backers.
Bill Gates has invested more than a billion dollars in Terror
Power, which is working to develop SMRS in partnership with
Warren Buffett's utility company, Pacificorp.
France gets around 70% of its electricity from nuclear energy,
which is the highest percentage in the world.
But the United States generates the most nuclear power overall,
mostly through plants that began construction in the 1960s and
70s. There are more SMRS being
planned in the United States today than anywhere else,
largely because of the tech industry.
While promising, the technology behind SMRS is still unproven at
scale. And the recent Wall Street
Journal article asked what customer would pay the higher
price for a first of kind project and who would order
enough to get an assembly line started.
The answer to that question today is quite obvious.
Big tech. And while power plants can be
thought of as boring infrastructure which might be
difficult to finance, the fact that these data centres are
needed for AI, which venture capital and retail investors are
very excited about, means that AI companies can raise loads of
cheap money from VC funds and pump it into building not only
the data centres that they need, but also the nuclear power to
run them on. As without sourcing your own
power, you might might be out of luck waiting for grid upgrades.
Last month, Microsoft teamed up with BlackRock to launch a $30
billion fund to invest in artificial intelligence
infrastructure. They told the press that the
partnership would mobilize up to $100 billion in total investment
potential once debt financing was included, and that the money
would be invested to enhance AI, supply chains and energy
sourcing. Microsoft said that they expect
this trend to catch on with other tech firms and said that
Microsoft might participate in all of them.
Governments, after years of ignoring it, are now getting
excited about nuclear power too. During UN Climate Week,
officials reaffirmed their commitment to triple the global
output of nuclear power by 2050, and at the same event, 14 large
banks said that they were willing to finance these
projects. Joe Biden recently signed a law
with bipartisan support, which is almost unheard of in the
United States today, to hasten the development of nuclear
energy projects. Historically, many Democrats
opposed new nuclear plants, citing safety, environmental and
economic concerns. Today, they see it as being
critical to their goals of reducing greenhouse gas
emissions and meeting the needs of a growing economy.
The Department of Energy Loan Programs Office has a $600
billion allocation of funds for renewables and advanced
manufacturing, and this can be used to fund new nuclear
projects too. As an example of how much
funding there seems to be, Bloomberg reported this summer
that Sam Altman of Open AI was staking a sizeable chunk of his
personal wealth on a nuclear fusion start up, which he says
is key to an AI enabled future. Nuclear fusion attempts to
create energy not by splitting atoms, but by smashing them
together, which requires extreme temperatures and lots of power,
but hypothetically could output with more energy than goes into
it without creating the radioactive waste associated
with today's nuclear fission reactors.
While currently unproven as a workable option for power
generation, nuclear fusion advocates claim that if
successful, fusion has the potential to be a sustainable
and abundant energy source. Skeptics, on the other hand, say
that fusion is worse than Tesla robotaxis, as it's always just
20, 20 years away. Most experts say that we're
unlikely to be able to generate large scale energy from nuclear
fusion anytime soon. But Microsoft still signed a
power purchase agreement with Altman's company Helion.
Earlier this year. Bloomberg reported that this
deal cut some Helion employees by surprise, and they expressed
doubts about the company's promise to get a prototype
running by year end. Like most VC backed start-ups,
Elian seems to be aiming to move fast and break things, but is
unfortunately being slowed down not just by the science, but by
numerous complaints of harassment and gender
discrimination. The fusion industry, which as I
said is not hugely promising in the short term, has still
managed to attract more than $7 billion in venture capital
investment. A nuclear power resurgence may
not be essential for AI to get off the ground, but when
combined with the climate commitments big tech firms have
made, along with the power demands of electrified
transportation and reassuring of manufacturing, it does seem to
be happening. From the perspective of big tech
firms, nuclear power success would help calm the climate
driven fears about the extreme power demands of generative AI.
And after that it'll be up to Big Tech to develop the AGI,
which they for some strange reason are telling investors
will kill us all. Which I have to say, I'm firmly
against. Thanks for tuning into this
week's podcast, with a special thanks to my supporters on
Patreon who make this all happen.
If you want to support the show, I'll put a link in the show
notes. Have a great week and talk to
you again soon. Bye.