Amazon presses the nuclear button

Hello from London, where I am, as a recent American transplant, still adjusting to English understatement (it turns out “you might send me that draft soon” was not just a suggestion).

I’m very excited to join this team. This week’s controversy over new climate reporting rules in the US shows that the push for cleaner, fairer capitalism is becoming ever more fiercely contested. And while this debate may not always be moral, it is certainly material. I hope to help readers see which way it will tack next.

Today, I have a story on two big themes that may be converging: Big Tech’s energy hunger, and the long-heralded, yet-to-arrive resurrection of nuclear power. Please send me tips and story ideas, or just say hi, at lee.harris@ft.com.

Could Big Tech drive a nuclear renaissance?

Atomic energy got a shot in the arm last week when Amazon quietly acquired a nuclear-powered data centre in Pennsylvania.

Amazon Web Services, the tech giant’s cloud computing unit, bought the centre from US power generator Talen Energy, which developed the site adjoining a nuclear power station.

AWS will buy electricity from the Susquehanna nuclear power station, which is 130km north-west of Philadelphia, under a 10-year power-purchase agreement. The $650mn deal is Amazon’s first-ever agreement with a nuclear power facility.

It comes amid a rally in public sentiment towards nuclear energy. At last year’s COP28 conference in Dubai 22 countries, including the US, UK and UAE, signed a pledge to triple nuclear generation capacity by 2050. Meanwhile, at US environmental non-profits, many of which were set up by anti-nuclear activists, a new generation is challenging the old guard’s stance.

A symbiosis

But the new fad for fission among governments and activists cannot, on its own, put up the patient capital needed to ride out the setbacks and cost overruns that have beset nuclear projects. Few industries look better positioned to patronise a nuclear renaissance than Big Tech.

Artificial intelligence consumes gobs of power. The International Energy Agency projects that combined demand from data centres, AI and cryptocurrencies could more than double from 2022 to 2026 to hit 1,000 TWh, roughly equivalent to the entire electricity usage of Japan.

Several tech moguls are already nuclear converts. Microsoft co-founder Bill Gates has long been a fan of the technology, and is a founding investor in nuclear engineering firm TerraPower.

Proponents hope the more compact design of small modular reactors could carry fewer construction risks and lower costs. Sam Altman, whose OpenAI has received billions of dollars in investment from Microsoft, also backs nuclear start-up Oklo, which late last year seemed poised to win a contract with the US military. That decision was later reversed, Northern Journal reported.

Amazon has been more circumspect. Asked about the Talen deal, the company avoided using the word nuclear. “To supplement our wind and solar energy projects, which depend on weather conditions to generate energy, we’re also exploring new innovations and technologies, and investing in other sources of clean, carbon-free energy,” a spokesperson said.

Amazon’s definition of clean energy may be as consequential as any government’s. The company is the world’s largest buyer of renewable energy, according to BloombergNEF, with a 33.6GW corporate PPA portfolio, larger than the entire power generation of Chile.

As a result, some nuclear proponents are pinning their hopes on the new deal.

“We lost a bunch of American nuclear plants in part because Amazon and others refused to accept nuclear as clean,” said Mark Nelson, managing director of the consultancy Radiant Energy Group. He said he was pleased that their stance had evolved.

Unlike intermittent resources such as wind and solar, nuclear can provide a bedrock of 24-hour baseload power. Nuclear power purchase agreements also offer attractive price stability for data centre operators, avoiding the commodity price risk — as well as the emissions — of natural gas.

Data centre operators face transmission and permitting delays when hooking up to the energy grid, according to Sean Graham, research director for cloud and data centres at International Data Corp, a market intelligence provider. That makes connecting to an on-site power source more attractive.

“Two separate trends are converging,” he told me. Tech companies want clean energy, and they want to co-locate their data centres at the source, since “there’s less that can go wrong in sourcing their power. And since there are significant energy losses in distribution, you’re also being more efficient and sustainable.”

The path to growth

Susquehanna nuclear station, which began operating in 1983, is typical of a US nuclear power fleet that is largely decades old. The question now for nuclear-friendly tech giants is whether they will help to drive new supply of plants, as well as hooking into existing ones.

Google, for its part, has spent years promoting public policy friendlier to carbon-free electricity. In a 2022 podcast, its energy and climate director Michael Terrell said the company had engaged regulators at local public utilities commissions, showing up to the scantily-attended meetings where crucial siting decisions are made.

Efforts to commercialise promising clean energy technology have also mirrored pandemic-era public procurement tools, such as advance market commitments used to spur vaccine production.

For example, Google signed an offtake contract in 2021 with Fervo Energy for a geothermal plant in Nevada, which would use drilling techniques perfected by shale oil frackers to produce fossil-free energy. The California search engine says that, in order to help such “advanced geothermal” systems achieve commercial viability, it has shouldered more of the project risks, such as termination, damages and underperformance.

Microsoft last year signed an agreement with Helion, a nuclear fusion company, to begin purchasing power from that still-nascent technology by 2028. The start-up, which is backed by OpenAI’s Altman, would pay Microsoft financial penalties if it fails to deliver.

Public power

In online communities devoted to libertarian figures such as PayPal founder (and Helion investor) Peter Thiel, nuclear evangelism is something of a religion. It goes hand in hand with technological accelerationism — an extreme emphasis on innovation and growth — and often disdains government as a damper on progress.

Perhaps there’s a good case for these “nuclear bros”, as they are derisively called, to resent the state. Governments bear plenty of fault for allowing nuclear knowhow to atrophy, and raising carbon emissions by prematurely shuttering reactors.

But, offline, Silicon Valley’s prevailing attitude towards state action looks different. Tech companies’ hiring decisions, and their selection of procurement tools, instead suggest a grudging respect for the public sector.

Take P. Todd Noe, Microsoft’s director of nuclear and energy innovation. Noe and another recent hire to Microsoft’s nuclear team were plucked from the Tennessee Valley Authority, a unionised, New Deal-era public utility that has long symbolised democratic control and ownership of energy. In 2016, the TVA became the first US utility to bring a new reactor online this century.

Unlike the militantly online wing of nuclear activism, Noe seems unconcerned with winning meme wars. He was not available for interview. Nor is he very active on X, where his most recent reposts are about baseball and the value of Christmas.

If the tech bros bankroll the nuclear renaissance, then, it may only be with the help of fusty public officials who saw America’s ageing fleet through the dark ages.

Smart read

In the FT, the head of the UN’s nuclear watchdog says multilateral lenders including the World Bank are “out of step” with their shareholders on atomic energy.