America’s technology companies need power, and lots of it.
Artificial intelligence combined with still-growing internet and smartphone use will likely require a game-changing investment in data centers — one that its already showing up in huge projected increases for electricity demand across the country. At the same time, many technology companies want to procure and invest in clean power, while many states have clean energy goals that may make it difficult to add new load to the grid without a corresponding investment in clean generation. All told, the Department of Energy estimates that some 700 to 900 gigawatts of new clean firm capacity — energy generation that doesn’t emit greenhouse gases and can run 24 hours a day — will be necessary to build a fully decarbonized grid. Even in the real world, technology companies are interested in acquiring whatever clean power they can.
This is where the nuclear industry would love to step in, specifically the segment of the industry making small modular reactors, otherwise known as SMRs. These reactors, which promise to be cheaper, smaller, and faster to build than the existing nuclear fleet, seem like an ideal match for what technology companies need. What could be better for data centers than on-site power (meaning no transmission costs) that runs all day (meaning no intermittency issues) with no carbon emissions (meaning no climate worries)? And if those nuclear power plants could be built quickly and cheaply out of pre-fabricated parts, all the better, right?
Whether SMRs actually can step in, well ... “If I had every agreement in principle SMRs have signed, I could walk from here to Europe without getting my feet wet,” Dan Yurman, the publisher of Neutron Bytes and a former project manager at the Idaho National Laboratory, told me.
The issue is that the most optimistic timeline for commercial deployment of SMRs starts in the late 2020s, with most observers putting actual deployment into sometimes in the 2030s. All the while, demand for data centers is growing now and is projected to accelerate sharply in the next few years.
As of today only a handful of small modular reactors are currently operational anywhere in the world, and none in the United States. The Nuclear Regulatory Commission, which governs all civilian nuclear construction in the country, has so far approved just one SMR design; NuScale, the company behind said design, recently laid off almost a third of its employees after its deal to build a power plant in Utah for a collection of local utilities fell through due to rising costs.
That approval process cost $500 million and took around five years, according to the Wall Street Journal — and, of course, NuScale has yet to get a functioning reactor out of it. The company is currently in the process of getting the go-ahead on a more powerful version of its existing design, which the company’s chief executive said could be approved “within 24 months.”
On paper, however, enthusiasm for co-locating SMRs with data centers and industrial sites abounds. Despite the collapse of the Utah project, during an earnings call this month, NuScale eagerly talked up a partnership with Standard Power to provide 2 gigawatts of electricity to data centers in Ohio and Pennsylvania. While its shares are down around 50% for the past 12 months, they are up about 35% (albeit to around $4.20) since the end of last year. In its presentation to investors, NuScale cited estimates that data center electricity consumption would triple by the beginning of the next decade.
“Management is quite enthusiastic around its opportunity with data center operators, noting that it's in discussions with large players as electricity demand accelerates via the AI buildout,” Ryan Pfingst and Chris Souther, two analysts for B. Riley Securities, wrote in a note to clients following the release of NuScale’s earnings report.
That enthusiasm notwithstanding, it’s not clear how far along the Standard Power project is. “A project of this size has a significant amount of detail that’s confirmed and structured before a project begins construction and those discussions are ongoing,” NuScale CEO John Hopkins told analysts on the company’s most recent earnings call. Standard Power did not return a request for comment asking for more details on the financing or construction timeline for its project. When asked for an update from NuScale, a spokesperson referred me to the earnings call.
Meanwhile, in Surry County, Virginia, work is advancing on a project adjacent to the existing Surry nuclear plant. The project would combine data centers, small modular reactors, and hydrogen fuel production; the data centers would come first, with SMRs following once costs come down, according to Michael Hewitt, the co-founder and chief executive officer of IP3, the project’s developer.
For Hewitt, the model for SMR deployment is to build them in factories and scale them directly for end users. “That’s the future of energy: If I want a gigawatt of data center, I build SMRs for the data center on day one,” he told me.
Which company will get there first? “If I had to guess right now, in terms of what will be factory-built first and available to consumers like us, it will more than likely be a light water reactor design — GE, NuScale, or perhaps Rolls-Royce,” Hewitt said. GE’s SMR design, the BWRX-300, is in the pre-application process with the NRC, and was picked by Ontario Power Generation for a nuclear development on its existing Darlington site. The Rolls-Royce SMR has been advancing through the British regulatory and procurement process, while the company currently designs light-water reactors for the Royal Navy.
“The first guy to get the factory built is the winner,” Hewitt said. But none will likely be ready for the Virginia project, at least not within the next eight to 10 years, though, he added. Nevertheless, urgent interest persists.
On Tuesday, Google, Microsoft, and the steel company Nucor announced that they were forming a group that would commit to purchasing clean firm technologies and included in its laundry list of potential power sources advanced nuclear. Another advanced nuclear developer, TerraPower, which is backed by Microsoft’s founder Bill Gates, announced Tuesday that it was applying for a construction permit for a plant in Wyoming and plans to start building non-nuclear portions of it in June. The company expects the full plant to come online in 2030.
There are dozens of other SMR designs at various stage of realization, but the absolute fastest a new design could get online, according to Adam Stein of the Breakthrough Institute, is around four years. “If a developer has not already submitted an application to the NRC to build a power plant — which none of them have for a specific site — then they mostly likely would not be able to operate a power plant before 2028,” Stein told me. “That is the soonest it could happen.”
That said, “If there’s more urgency from the market, a clearer and larger demand signal, then developers will move faster than they are right now,” Stein added.
What’s far more likely, according to Yurman, is that tech companies will sign power purchase agreements for existing nuclear power plants, as Amazon has with Talen Energy. “That’s immediate access to reliable power,” Yurman said.
And even if SMRs are actually built, they may not end up adjacent to data centers, but instead on the sites of existing nuclear and even coal plants (this is the plan for the TerraPower site) which have preexisting grid connections. “If I’m putting together this kind of deal,” Yurman told me, “I’m looking at an old coal power plant I can demolish and keep the grid connection.”
While American tech companies are eager to buy up new power, the real opportunity, should it ever come, may be overseas, where smaller countries without indigenous energy supplies could be especially interested in nuclear power.
“What we need to do is get to full rate production and start stamping out SMRs with low risk,” Hewitt said. “If we do that, we can take these things everywhere.”
The Budget Lab