Big tech seeks nuclear power with AI push
Mark Casey
Equity Portfolio Manager
Adam Ward
Equity Investment Analyst

Long shunned, nuclear energy appears poised for a comeback. The world’s largest technology firms, including Microsoft and Amazon, are increasingly exploring nuclear energy as a solution for their enormous power needs. The growth of artificial intelligence (AI) and the vast electricity requirements of data centres have placed additional emphasis on electricity even as companies attempt to meet their emissions goals.

Big tech seeks nuclear power with AI push

The mountain chart above shows nuclear power generation from 1972 until 2023 in terawatt hours and projections from 2024–2026 from the International Energy Agency. The x-axis shows the years, while the y-axis represents terawatt hours (TWh). The regions represented in the chart are China, other Asia countries, the European Union, the United States and other countries. From 1972 to 2017, the chart shows a steady increase in nuclear power generation across the European Union, United States and Other countries, while China and Other Asia experienced a drop off after 2008 before rising again. For the forecasted period of 2024-2026, it’s expected that China will add the most nuclear power and for global nuclear power generation to reach near 3,000 TWh. On the right side of the image, there’s a box listing three headlines about companies investing in nuclear power for operations. They are as follows: “Microsoft targets nuclear to power AI operations,” from the Wall Street Journal on December 12, 2023. The second is “How tech companies are powering their operation with nuclear and renewables,” from Forbes on March 6, 2024. The final is “Amazon just bought a nuclear-powered data center,” from Yahoo Finance on March 5, 2024.

Sources: Capital Group, International Energy Agency (IEA). Evolution of nuclear power generation from 1972 until 2023 in terawatt hours and IEA projections from 2024–2026. Data as of January 17, 2024. Note: IEA’s forecast is based on projects currently under construction and expected to be operational by the end of 2026. EU refers to the European Union. India data was combined into “Other Asia.”

Last June, Microsoft struck a deal with Constellation Energy to supply one of its data centres in Virginia with nuclear power. More recently, Amazon purchased a data centre in Pennsylvania from Talen Energy with a plan to utilize nuclear power from one of Talen’s nearby plants.  

"Big tech companies will be a key driver of reigniting the nuclear power conversation, as their data centres require 24/7 power from reliable sources that curb carbon dioxide emissions," equity portfolio manager Mark Casey said. 

For utility companies that own nuclear plants, they’re gaining a "new lease on life," where their lowest cost form of power is generating more revenue than was previously forecast, Casey added. Electricity usage from AI, cryptocurrencies and data centres could double by 2026, according to estimates from the International Energy Agency (IEA). Data centres gobbled up about 460 terawatt hours (TWh) of electricity in 2022 and could surpass 1,000 TWh in 2026.   

Emerging markets countries also appear to be turning to nuclear power to address their growing needs, led by China and India, both of which are expected to add more nuclear capacity. With an added 29 gigawatts of nuclear capacity projected to be online by 2026, over 50% of that capacity will be built in China and India, according to the IEA. Nuclear power usage differs across the European Union. For example, France satisfies 70% of its energy consumption with nuclear power, whereas it makes up 3.3% of Germany’s energy mix. 

Greater international acceptance of nuclear energy — along with broader governmental recognition that nuclear power can be used in addition to other forms of energy such as wind and solar — have shifted perspectives on nuclear power’s potential, says equity investment analyst Adam Ward. 

“I’m coming to the conclusion that nuclear will achieve a meaningful price premium for its power, as it’s the only source that is both carbon free and the potential to be 100% reliable,” Ward said.   

Mark L. Casey is an equity portfolio manager with 23 years of investment industry experience (as of 12/31/2023). He holds an MBA from Harvard and a bachelor’s degree in history from Yale University. 

Adam Ward is an equity investment analyst with 19 years of investment experience (as of 12/31/2023). He holds an MBA from Stanford and a bachelor’s degree in accounting from Brigham Young University.

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