Nuclear Power's Tipping Point: U.S. Electricity Demand Set to Soar

By Timothy Gardner

HOUSTON () - Everyone from the U.S. energy secretary to Big Tech touts small modular nuclear reactors as a potential answer to booming power demand, but the technology is struggling to become commercial due to costs and regulatory hurdles.

Powering artificial intelligence with energy-demanding data centers is anticipated to increase electricity consumption significantly. This trend is particularly notable in the United States, where overall usage had remained relatively stable over the past twenty years.

Proponents of small modular reactors argue that this technology will ultimately become more cost-effective and quicker to build compared to conventional nuclear power plants. This is due to their construction from prefabricated components instead of large custom-made projects. These reactors have the potential to generate nearly emission-free electricity.

However, the nations that have developed small modular reactors (SMRs) also possess centralized governmental systems, facilitating project funding and determining suitable SMR fuels and coolant types. In 2019, Russia launched a floating SMR in the Arctic region, followed by China unveiling their own SMR in 2023.

The U.S. regulatory framework is underdeveloped, other power sources are cheaper, and there are nagging concerns about uranium supplies and radioactive waste.

Greg Jaczko, former chairman of the U.S. Nuclear Regulatory Commission, or NRC, said the players pushing SMRs are not utilities with decades of experience dealing with the intricacies and safety requirements of nuclear plants, but rather AI companies, the data center community and vendors.

"In order to truly make significant progress quickly with a new nuclear construction project (such as SMRs), it’s essential for the well-established, seasoned participants to lead the way," he stated.

'AT THE BEGINNING'

As global gas supplies increase and the expenses for solar power along with battery storage decrease, they present strong competition, making it challenging for advanced nuclear technology to gain prominence.

"As we stand at the outset of a novel sector, " stated U.S. Energy Secretary Chris Wright during an interview at the CERAWeek conference in Houston.

The initial Small Modular Reactors (SMRs) won’t be competitive against natural gas, yet as technology advances, they will become more cost-effective. The U.S. government aims to assist these reactors by easing regulatory hurdles and providing financial support, noted Wright, who previously served on the board of an SMR firm called Oklo before taking office.

In December, Oklo entered into a preliminary pact to implement small modular reactors for data center provider Switch within two decades. The company aims to secure approval from the Nuclear Regulatory Commission by late 2027; this follows an initial rejection of their application in 2022.

Oklo's founder and CEO Jacob DeWitte blamed the rejection on difficulties with remote work during the COVID-19 pandemic.

DeWitte stated, “We took risks.” “Nevertheless, we achieved significant advancement and garnered substantial feedback.”

The approval process by the NRC for reactors—which produce radioactive waste and require stringent controls over operations and proliferation—can span several years. Adding complexity, numerous plants intend to function using specialized fuels, advanced technologies, and different cooling methods.

"The regulatory structure has not actually been established or put into place yet," stated Rahul Vashi, a partner at the law firm Gibson, Dunn & Crutcher. According to Vashi, it might require several presidential terms for a commercially viable small modular reactor (SMR) to be constructed.

Scott Burnell, a representative for NRC, stated that the organization is collaborating with suppliers to “accomplish our objective of facilitating secure nuclear reactor implementation in the most efficient manner.”

However, even possessing an NRC license does not ensure success. The sole commercial SMR that received approval from the NRC had to abandon its venture. Despite securing a $1.35 billion agreement with the Department of Energy in 2020 spanning ten years, NuScale decided to terminate its Idaho initiative in 2023 when expenses more than doubled.

John Hopkins, the CEO of NuScale, stated during a recent earnings call that his firm hasn't secured any agreements with American data centers because organizing such initiatives is quite complex. However, he mentioned that they are still progressing with their endeavors in Romania.

Amazon.com and Alphabet’s Google entered into deals towards the end of last year with new nuclear firms aimed at utilizing small modular reactors (SMRs) for their data center operations.

"Nuclear has to be a part of the mix," Ruth Porat, president and Chief Investment Officer of Alphabet and Google, told CERAWeek. "If we don't start now in a focused way and replicate a number of them ...we're not going to be able to be able to drive down the cost curve."

A representative from Kairos Power, which is collaborating with Google, stated that the company trusts the NRC possesses the “necessary technical expertise to evaluate our technology, acknowledging that they must keep evolving to handle the significant volume of applications expected in the future.”

DEEPSEEK CLOUDS DEMAND

Several Small Modular Reactors (SMRs) intend to operate using High-Assay Low-Enriched Uranium (HALEU), which has an enrichment level of up to 20% uranium compared to the usual 5% for conventional reactors. In light of this, the U.S. government is starting to support initiatives aimed at producing HALEU within the country as part of new regulations banning uranium imports from Russia, one of the world’s major suppliers.

But some physicists question the fuel's safety.

The National Nuclear Security Administration is initiating a study on the proliferation risks associated with HALEU following warnings from physicists about its potential use in building a nuclear weapon. These experts suggested capping HALEU enrichment levels between 10% and 12%. However, such restrictions might reduce the effectiveness of small modular reactors (SMRs).

Amazon stated they are incorporating nuclear power into their energy mix due to its attributes of being carbon-free, scalable, safe, and dependable.

An SMR firm called X-Energy, which is collaborating with Amazon, has submitted an application for a permit at a facility in Tennessee. The company claims that its fuel will have resistance against proliferation, as stated by X-Energy spokesperson Robert McEntyre.

Another potential industry headwind is uncertainty over the speed of future power demand growth.

A lot of enthusiasm surrounding Small Modular Reactors (SMRs) has stemmed from predictions indicating that Artificial Intelligence (AI) could lead to a significant rise in electricity usage. However, when Chinese startup DeepSeek announced at the beginning of the year that their open-source AI models would consume much less energy than anticipated, these projections were called into question.

"If these AI models keep getting more compact and efficient, we might witness a significant surge in AI technology capable of running on everyday consumer gadgets without relying on external servers, thereby reducing massive energy consumption," explained Martin Chorzempa, a senior fellow at the Peterson Institute for International Economics.

(This story has been updated to replace an image, with no alterations to the text)

(Reported by Timothy Gardner; edited by Richard Valdmanis and Nia Williams)