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Nuclear power's stock is rising thanks to artificial intelligence's insatiable appetite for electricity.
Tech giants including Microsoft, Oracle, and Amazon have struck deals in nuclear power this year in hopes of supplying their data centers with carbon-free electricity. The deals have buoyed the confidence of global financial institutions, 14 of which on Monday endorsed a goal to triple nuclear energy by 2050. Bank of America and Goldman Sachs are among the signatories.
It's a remarkable shift, given that just five years ago the nuclear plant at Three Mile Island in Pennsylvania shut down in part because it couldn't compete with cheap natural gas. The site was also a symbol of the risks of nuclear energy after one reactor partially melted down in 1979. Now Constellation Energy, the owner of Three Mile Island, plans to spend $1.6 billion over three years to reopen one reactor that had safely operated for decades. Microsoft agreed to buy the electricity for its growing fleet of data centers.
"It's only recently that people have come to appreciate the importance of [nuclear power] from a reliability perspective," Kathleen Barrón, executive vice president and chief strategy officer for Constellation, told Semafor during an event at Climate Week in New York City. "But even more so, that there just are no other resources on the grid that can operate when customers need it, consistently, without any air pollution or carbon emissions."
All those factors make nuclear attractive to Big Tech companies, which made lofty climate promises but are still generating more emissions as they aggressively invest in electricity-hungry data centers. Earlier this year, Microsoft reported a 30% spike in carbon emissions between 2020 to 2023, blaming AI and all the carbon-intensive cement, steel, and microchips needed to build data centers. Google reported a nearly 50% increase in emissions since 2019, citing similar drivers.
That climate dilemma isn't slowing the AI boom. Microsoft, Amazon, Google, Meta, and Apple are on track to spend a combined $200 billion on fixed assets this year, with the majority of that money going toward data centers to support AI, according to a Bernstein research note from earlier this year. In the next five years, that spending could surpass $1 trillion.
All the growth risks taxing an already-stressed power grid that uses a lot of dirty natural gas. The pipeline of data centers in places like Virginia and Arizona has already slowed the green energy transition. The Electric Power Research Institute, an energy think tank, forecast that data centers could consume up to 9% of US electricity annually by 2030, compared to an estimated 4% today. And while tech companies are the largest buyers of solar, wind, and battery storage, it still isn't enough to meet the 24/7 needs of data centers.
While nuclear power is around the clock, critics warn that it isn't a realistic solution to the data center problem. Hyperscalers need energy now and restarting a mothballed nuclear plant — let alone building new ones — can take years or even a decade. It's also an expensive gamble. Nuclear projects have a track record of going over budget. The most recent new US nuclear plant, built by Georgia Power, arrived seven years late and $17 billion over budget.
Three Mile Island could run into similar problems, said Tim Judson, executive director of the Nuclear Information and Resource Service, which advocates against nuclear power and for renewables like solar and wind. He noted that the plant needed licensing approvals from the Nuclear Regulatory Commission and that reviving an old reactor that's been idle for five years could prove technically challenging.
Barrón of Constellation Energy acknowledged that even with new federal tax breaks for nuclear energy, Three Mile Island wouldn't be economical to run without the deal with Microsoft. Restarting the plant requires NRC approval following a safety and environmental review, as well as permits from state and local agencies. Constellation Energy said it will pursue a separate license renewal that extends operations to at least 2054.
Judson is also concerned that Constellation Energy is talking to a regional grid operator, PJM, about putting the nuclear plant in front of a long queue of solar, wind, and battery storage projects waiting to be connected to the grid. He argued there'd be no need for a nuclear revival if renewable projects cleared those roadblocks faster.
Nuclear's supporters disagree, including Arshad Mansoor, president and CEO of the Electric Power Research Institute. He told BI that no amount of renewables and battery storage will be enough to bring the economy to net-zero emissions. Data centers aren't the only driver of power demand. Electric vehicles and new manufacturing plants need electricity, too.
Mansoor thinks the AI boom will actually accelerate a greener economy, noting that tech companies sparked greater deployment of wind and solar power.
"Now they've created a second spark, and it will not just be nuclear," Mansoor said.
He predicted greater buy-in for geothermal, long-duration battery storage, and carbon capture and storage at gas plants — many more of which will be built in the coming years, Mansoor said.
He also echoed what many tech executives said when defending AI's energy consumption: It will reduce emissions in the long run, such as by helping utilities manage the grid more efficiently and deploy renewables at peak demand times.
However, it still isn't clear whether such benefits can offset soaring emissions.
