The nuclear option?

Recently both Google and Amazon have announced they have closed deals to source energy for their datacenters from nuclear power.

On October 15th, Google announced it had signed a deal to buy energy generated from a fleet of small nuclear reactors (SNR) to be manufactured by Californian company Kairos Power, the first of which is scheduled to go online in 2030.

The following day, October 16th, AWS (Amazon Web Services) announced it had closed a deal with Dominion Energy, Virginia’s utility company, for the development of a small nuclear reactor near Dominion’s existing North Anna nuclear power plant.

Previously on September 24th Microsoft had announced it had agreed with Constellation Energy (the owner and operator of Three Mile Island power plant) to purchase all energy from it, effectively triggering the re-start of Three Mile Island (aptly re-christened Crane Clean Energy Center for the occasion), potentially by as early as 2028.

What are the takeaways from this chain of events?

First of all - timing. Three of the biggest energy consumers in the world making the same identical choice with regards to strategic energy sourcing long-term is a significant swing. This is not some reserve back-up plan, it’s the main path the internet giants have chosen to tread to supplement solar + wind energy.

It appears that the hydrogen “bubble” is indeed bursting, and that hydrogen is no longer considered  the silver bullet long-term alternative to fossil fuels as a source of energy, and GAFA (Google, Amazon, Facebook and Apple) are taking the lead in alternative energy sourcing.

(Incidentally, while there is no absolute consensus, the majority of stakeholder agree that nuclear energy is indeed “clean” or “green”, as it does not generate any carbon dioxide or other greenhouse gases).

The other aspect is that, while the “privatization” of nuclear energy is expected to remain, at least in the medium term, strictly confined to US of A, the inclusion of nuclear amongst green energy sources is taking place also elsewhere.

 In Japan nuclear is already included in the green energy mix, and in China on March 24th, 2024 the Chinese National Committee called for the inclusion of nuclear in the green energy transition http://en.cppcc.gov.cn/2024-03/11/c_1023799.htm

Only Europe, where nuclear energy is simply too controversial, is lagging behind. While Germany is shutting down its nuclear reactors, and France is struggling to keep an ageing nuclear fleet in operation, on March 30, 2023 the Council and the European Parliament reached a provisional agreement recognizing “the specific role of nuclear power, which is neither green nor fossil”. Which pretty much sums up the European Parliament.

But back to the US of A, and the “privatization” of nuclear power: it’s also a significant example of private sector taking the lead, without waiting for the legislator or Government to move first. The attitude that has built the biggest economy in the world is still there, and how refreshing it is to see.

There are other examples – one that springs to mind is Elon Musk’s Starship rocket-catching robotic arms. One doesn't need to be a fan of Mr Musk to recognize credit when it’s due – after the Space Shuttle, NASA had appeared to have all but lost its drive and innovator role in the race to space. It took a private individual risking his own money to advance space travel once again.

However, now the legislator is called into action, and will need to decide how to manage the new fleet of private nuclear power plants. Since the benefits are privatized, should the cost be externalized? Meaning that in case of an accident, the clean-up costs should also be unto the private company and not on the community? Which would require a whole new level of insurance, which would likely impact operational costs significantly.

Interesting times ahead on the race to net zero.