Big Tech’s March Toward Nuclear Data Centers Picks Up Steam

Major technology firms’ embrace of nuclear energy as the answer to the data center industry's power woes may have reached an inflection point. 

Friday’s announcement that a reactor at the Three Mile Island nuclear power station would be recommissioned to provide power for Microsoft’s AI data centers capped a month in which the tech industry’s enthusiasm for nuclear energy has shifted from talk to action. 

Companies like Microsoft, Google and Amazon — and the data center providers they lease from — have long touted nuclear power as a key piece of the solution to one of the industry’s most pressing problems: how to access massive blocks of electricity to power the data centers needed for artificial intelligence and cloud computing while meeting ambitious carbon reduction goals.

Data centers added the equivalent of a second New York City to U.S. power grids last year alone, while the industry’s carbon footprint is expected to triple by 2030 due to AI.

The financial sector is joining the tech industry in pushing for nuclear as an energy solution. On Monday, a group of 14 major financial institutions — including Ares Management, Bank of America, Brookfield, Citi, Goldman Sachs and Morgan Stanley — expressed support for the effort launched at COP28 to triple global nuclear energy capacity by 2050. 

Microsoft’s Three Mile Island power agreement comes on the heels of other such “behind-the-meter” deals between tech firms and nuclear plant operators that have been signed or are in the works. At the same time, these companies are for the first time devoting real resources toward developing data center campuses powered by small modular nuclear reactors, or SMRs. This momentum is spawning an emerging ecosystem of third-party firms and products aiming to help satiate Big Tech’s growing appetite for nuclear energy. 

AI Data Centers Giving New Life To Aging Nuclear Power Plants

Constellation Energy, the biggest U.S. operator of nuclear power plants, signed a 20-year deal with Microsoft for all the electricity generated by one of the reactors at the Three Mile Island Nuclear Generating Station in Pennsylvania. 

Constellation plans to invest $1.6B to reopen the reactor, which has been out of operation since 2019. While the deal was framed as powering Microsoft’s AI and cloud computing infrastructure, electricity will not flow directly from the plant to Microsoft’s data centers. Rather, the carbon-free energy will match the power used by Microsoft for its data centers in Pennsylvania, Illinois, Virginia and Ohio.  

The agreement generated national headlines, if only due to Three Mile Island’s association with the 1979 partial meltdown of a different reactor on the site — widely regarded as the U.S.’ worst nuclear disaster. But it is just the latest instance in recent months in which the owner of an aging and unprofitable nuclear power plant has seen opportunity in Big Tech’s AI arms race and sought to sell power directly to data center users. 

In March, Talen Energy opened the floodgates by announcing it had sold hundreds of acres adjacent to a different Pennsylvania nuclear plant to Amazon Web Services, with the cloud giant planning as many as 15 data centers on the site. The $650M land deal was tied to a long-term contract in which AWS would buy all the electricity for the campus, as much as 960 megawatts, directly from the plant. 

This arrangement was the first of its kind between a nuclear operator and a data center firm, and it provided a model that other utilities have quickly sought to replicate in markets across the U.S.

Dominion Energy indicated over the summer that it may develop a data center campus connected directly to the Millstone Power Station, its nuclear plant in Waterford, Connecticut. Prior to its deal with Microsoft, Constellation Energy suggested in July that it is in talks with firms interested in building data centers adjacent to its Calvert Cliffs Nuclear Power Plant in Maryland.

Meanwhile, Public Service Enterprise Group is in talks to provide power to data centers from a pair of nuclear power stations in southern New Jersey, according to the firm’s leadership, while utility Vistra is reportedly considering behind-the-meter deals with data center operators in Texas and Ohio.

These deals are emerging as the Department of Energy looks to expand nuclear energy production at old nuclear and fossil fuel plants to help meet growing electricity demand, much of it stemming from data centers. A DOE report released last week identifies 186 operating or recently retired coal and nuclear sites across the U.S. that are potentially suitable for repowering with new nuclear reactors. The report says the plants could add as much as 95 gigawatts of power production capacity to U.S. grids.

Tech Giants Betting Unproven SMRs Will Power Data Centers

Speaking at Carnegie Mellon University last week, Google CEO Sundar Pichai indicated he expects to see additional investment in SMRs as a potential new energy source to help meet the massive energy needs of AI. 

“I see an amount of money going into SMRs for nuclear energy,” he said, according to Data Center Dynamics. “When I look at the capital and innovation going into [new energy], I'm optimistic on the medium to long term.”

SMRs, also known as microreactors, range in output from less than a megawatt to 300 MW and are closer in scale to the power plant on a Navy submarine than a traditional utility-owned nuclear power station.

The technology has been held up as a potential silver bullet for the data center industry’s power woes. Firms developing these reactors, including Oklo, are backed by the likes of OpenAI founder Sam Altman. But SMRs have yet to prove themselves as a commercially viable power source for data centers in the U.S. 

Yet in recent weeks, there have been indicators that the world’s largest tech companies are all-in on SMRs. 

Oracle founder Larry Ellison told investors last month that the firm is planning a gigawatt-scale campus that will be powered by three SMRs. While Ellison provided few details about the project or the identity of the firm designing and building the reactors, he said the company had obtained building permits for the SMRs and identified the project site. The nuclear-powered campus is in the middle of the design process, with construction set to begin soon, according to Ellison.  

AWS is looking to hire a chief engineer for its data center power team with experience working with modular nuclear power plants, according to Data Center Dynamics. Microsoft has also looked to add SMR expertise to its data center power team, naming a former executive at an SMR firm as its director of nuclear technologies.

New Products Emerge To Connect Data Centers With Nuclear Power

A business ecosystem is emerging to support the tech industry’s embrace of nuclear power for data centers, with two platforms launching this month promising to help connect data center developers and users with nuclear power solutions.

Data center development advisory firm Caddis Cloud announced last week it is entering into a strategic partnership with IP3, a “nuclear integrator” that specializes in financing, operating and developing nuclear facilities. The firms say the partnership “focuses on leveraging small modular reactors to meet growing energy demands.”

Days earlier, software maker Xendee announced it is collaborating with the University of Illinois Urbana-Champaign to build a platform that will similarly help data centers adopt modular nuclear reactors. According to Xendee, the platform will help data centers utilize local microgrids to incorporate existing renewables and help phase in SMRs and other carbon-free technologies as they are developed.