Artificial intelligence (AI) is transforming industries and utilizing huge amounts of energy to do so. Massive data centers powering advanced AI systems require significant amounts of energy. This demand poses a challenge for tech giants committed to sustainability. The question in is: How do you AI’s energy hunger reliably and sustainably?
Many see nuclear power as the sustainable solution. But the industry is not looking at traditional nuclear plants but Small Modular Reactors (SMRs). Tech giants, including Microsoft, Google, and Amazon, are increasingly investing in SMRs, betting heavily that these compact nuclear reactors can offer a reliable, carbon-free solution for their vast data centers.
AI’s immense energy demands
AI’s revolutionary capabilities depend on computational power, requiring vast arrays of servers operating continuously. By 2030, U.S. data centers alone may consume nearly 9% of the nation’s total electricity, more than double the amount currently used. Renewable sources like wind and solar, despite their environmental advantages, cannot deliver the constant, uninterrupted power supply required by AI operations. This has nudged tech leaders toward nuclear power to ensure steady energy availability.
Revival of nuclear energy
The nuclear revival is driven primarily by the intersection of AI’s burgeoning energy needs and corporate sustainability commitments. Unlike traditional large-scale reactors, SMRs are smaller, easier to build, and modular, allowing for scalable deployments directly near data centers. Their compact design means less land usage and faster construction times, ideally suited to meeting urgent energy demands.
Notably, Microsoft exemplifies this renewed interest in nuclear power. In 2024, Microsoft signed a groundbreaking 20-year deal with Constellation Energy to restart the Three Mile Island nuclear plant, now the Crane Clean Energy Center. This shows Microsoft’s commitment to leveraging nuclear power to power its massive AI-driven data center operations.
Similarly, Amazon has secured nuclear-powered data centers near the Susquehanna nuclear plant, one of America’s largest nuclear facilities. While Amazon’s initial efforts met regulatory hurdles, its intent clearly demonstrates the strategic direction tech companies are taking to mitigate transmission costs and ensure reliable energy.
The promise of Small Modular Reactors (SMRs)
SMRs represent a generational shift in nuclear technology. Their smaller size, enhanced safety features, and modular scalability make them attractive to tech giants. Several prominent SMR projects are already underway:
- TerraPower, founded by Bill Gates, broke ground on a 345-megawatt sodium-cooled reactor in Wyoming, paired with a molten salt-based storage system. TerraPower’s partnership with Sabey Data Centers shows the direct link between SMR technology and data center energy needs.
- Kairos Power is developing molten salt SMRs specifically to power Google data centers by 2030.
- X-energy has partnered with Amazon to develop graphite pebble-bed SMRs.
Behind-the-meter advantage
Another factor accelerating SMR adoption is the concept of “behind-the-meter” power, where nuclear reactors are co-located directly with data centers. This arrangement reduces transmission costs, ensuring stable energy prices and high reliability. However, it has sparked regulatory debates, as exemplified by the Federal Energy Regulatory Commission’s recent concerns regarding fairness and grid stability.
Despite these regulatory challenges, the economics strongly favor behind-the-meter nuclear arrangements for energy-intensive AI operations. As data center energy needs spike, tech companies’ investment in nuclear power appears not only pragmatic but increasingly necessary.
Bipartisan support bolsters nuclear revival
The nuclear resurgence fueled by AI demand enjoys bipartisan political backing, a rare consensus in today’s polarized climate. This support increases the possibility of regulatory approvals and government incentives, crucial for overcoming barriers associated with nuclear projects. The U.S. government under both President Biden and the Trump administration has acknowledged nuclear power’s strategic role in national energy infrastructure, further smoothing the path for SMRs.
Challenges and future outlook
While enthusiasm grows, significant hurdles remain. Nuclear projects have typically encountered budget overruns and schedule delays. For example, Microsoft’s Crane Clean Energy Center deal already involves paying premium rates for nuclear power. Nonetheless, tech giants are betting that these initial costs will be justified by long-term stability, reliability, and carbon neutrality.
The industry’s future hinges on SMRs’ successful deployment and operation. If tech giants like Microsoft, Google, and Amazon succeed, they could fundamentally shift public perception of nuclear energy, transforming it from a risky venture into a cornerstone of sustainable infrastructure.
AI’s explosive growth demands unprecedented power availability—continuous, scalable, and carbon-free. Tech giants, grappling with this reality, see SMRs as the best answer to sustain their vast, energy-intensive data centers. Through strategic partnerships, massive investments, and renewed confidence in nuclear technology, SMRs are poised to reshape energy landscapes worldwide.