Shares of nuclear energy companies hit record highs this week after Amazon and Google signed a landmark power supply deal, accelerating efforts to deploy America’s first small modular reactor (SMR). It skyrocketed to .
Shares of US-listed SMR developers Okro and NuScale Power have increased by 99% and 37% respectively in the past week after rival private SMR developers X Energy and Kairos Power announced funding deals. % rose. Shares of Cameco, Oklo, NuScale, Constellation, and BWX Technologies all traded at record highs throughout this week.
The deal will support the deployment of up to a dozen next-generation nuclear reactors to provide low-carbon electricity to power Amazon and Google’s energy-hungry artificial intelligence data centers. .
Investors saw the announcement as evidence that Japan’s nuclear renaissance is accelerating after a slump following the 2011 Fukushima disaster.
The proliferation of data centers is driving historic increases in electricity demand in the United States, undermining efforts to reduce dependence on fossil fuels and decarbonize.
Constellation Energy Group, the operator of the largest conventional nuclear reactor in the United States, has seen its stock more than double since the beginning of the year.
Last month, Constellation signed a 20-year power supply agreement with Microsoft that will allow it to restart Pennsylvania’s Three Mile Island nuclear power plant. This location was the site of the most serious nuclear accident in U.S. history, when one of the reactors suffered a partial meltdown.
Shares in uranium producer Cameco have risen 38% this year, and shares in nuclear components supplier BWX Technologies have risen 65%.
Seth Gray, chief executive officer of nuclear fuel developer Lightbridge and president of the American Nuclear Association, said reactor companies “have been saying for some time that they need AI to meet the AI power demand boom. , no one seems to believe it.” International Council.
“These large investments show that the tech industry does not believe that renewables and batteries can provide enough stable or cost-effective power, and that nuclear power will be needed in the future,” he said. It will happen,” he said.
Until recently, investors were cautious about financing the deployment of small nuclear reactors. Small reactors are touted by proponents as being smaller, safer and more efficient than large reactors. Concerns about the industry’s track record of delivering projects on time and on budget, as well as high interest rates and a lack of customers willing to take on projects, were slowing progress.
Last year, X-Energy was forced to enter into a $1.8 billion deal to go public through a special acquisition vehicle, citing “difficult market conditions.” Shortly after, NuScale canceled plans to build America’s first small nuclear reactor. After increasing electricity rates by more than 50% over two years to $89 per megawatt hour, not many utilities showed interest in buying power from them.
“The dilemma for the (small reactor) industry was that customers didn’t want to sign up for Unit 1 because it was more expensive to build than subsequent reactors,” said Mark Bianchi, an analyst at TD Cowen. , because the risks are high.”
Amazon and Google’s decision to invest in small nuclear reactors reflects the need to source reliable, cost-effective, and clean electricity to power a new wave of AI data centers. In total, nearly 24GW of new data centers were announced by companies in the first half of 2024, more than triple the number in the same period last year, Wood Mackenzie said.
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“This has created a real sense of urgency: we don’t just need to replace existing fossil power, we need to build more fossil power now.” said Kairos Power founder and CEO. Director Mike Laufer said. Kairos Power this week signed a deal with Google to deploy six to seven small nuclear reactors by 2035.
The industry also benefited from billions of dollars in funding from the U.S. government, which is concerned that Russia and China, which have deployed small numbers of small nuclear reactors, could become firm leaders in the nuclear field. are. Washington also recognizes the need to ensure a stable power system to maintain its lead in AI technology without increasing emissions.
“The only constraint on America remaining the leader in artificial intelligence is power. It’s not land or chips, it’s power. That’s goal number one,” said Clay, CEO of X-Energy.・Mr. Sell said.
But critics warn that this week’s excitement around nuclear power, particularly small reactors, masks serious risks in introducing new-generation technologies that have traditionally been prone to delays and cost overruns.
Edwin Lyman, director of nuclear safety for the Union of Concerned Scientists, said XEnergy and Kairos’ SMRs are “untested designs” and are likely to be deployed well beyond their target date of 2030 or later. He said it would take a long time.
“The path to safe and reliable commercial operation of any experimental nuclear technology will be a difficult one, and it is virtually impossible today to estimate what the final cost of electricity will be. ” he said.
Developers of competing energy sources say strict regulatory standards and challenges remain hurdles.
“This euphoria is a bit exaggerated,” said Andres Gurski, chief executive of AES, the largest renewable energy company that has signed 5.8GW of power purchase agreements with Google, Microsoft and Amazon.
Solar, wind and battery storage account for 95% of all capacity waiting to be connected to the grid, compared with less than 1% from nuclear power, according to data from Lawrence Berkeley National Laboratory. . Construction of small nuclear reactor projects has not begun in the United States, with more than 80% of announced capacity still not in the development pipeline, Wood Mackenzie said.
But developers of small nuclear reactors say they believe the tech giant’s support is the game changer they need.
“The technology community is not only focused on the benefits of carbon-free, but also on availability and reliability,” said Clayton Scott, chief commercial officer at NuScale. “The momentum is here.”
