Silicon Valley giants demonstrate their prowess in using electricity for AI: Microsoft plans to restart abandoned nuclear power plants, while Google also sets its sights on nuclear energy

US tech giants are working hard to meet the increasing electricity demand for artificial intelligence (AI) technology and its applications. Microsoft recently reached an agreement to use nuclear energy sources by restarting abandoned nuclear power plants to power data centers, while Google is also exploring methods to utilize green energy sources and has set its sights on nuclear energy.

On Thursday, October 3rd, local time in Tokyo, Google and its parent company Alphabet's CEO Sundar Pichai revealed in an interview with Nikkei Asia that Google is studying the use of nuclear energy as a potential "green" energy source to generate electricity for its data centers. When discussing generative AI, he stated, "For the first time in our history, we have the foundational technology that underpins everything we do today. I think we have a lot to offer in this regard."

However, Google's heavy investment in AI has led to a "side effect": as revealed in the annual environmental report released two months ago by Google, due to the expansion of data centers supporting AI systems, Google's greenhouse gas emissions are projected to surge by 48% from 2019 to 2023. This means that the electricity demand generated by AI systems may make it difficult for Google to achieve its decarbonization goals. Three years ago, Google pledged to achieve net-zero direct and indirect greenhouse gas emissions by 2030, with its grid running on zero-carbon energy sources 24 hours a day by then.

In this context, as 2030 approaches, Google may have to find ways to ensure access to green energy while controlling carbon emissions.

Pichai stated on Thursday that Google's aforementioned 2030 decarbonization goal is "very ambitious," and "we will continue to work very ambitiously towards this goal. Obviously, the trajectory of AI investments increases the scale required to achieve the (emission reduction) task." He further mentioned:

"We are now considering additional investments, such as in solar energy, and evaluating technologies like small modular nuclear reactors."

The media outlet Nikkei News, which interviewed Pichai, pointed out that Pichai did not specify where Google might procure nuclear power from. Most of the electricity may come from restarting "waste heat recovery," similar to what Microsoft is doing by reactivating the Three Mile Island nuclear power plant in the US, which had a serious nuclear accident.

A recent article by Wall Street CN mentioned that to meet the electricity demand of its AI data centers with a large amount of clean energy, Microsoft signed a 20-year power purchase agreement with the largest nuclear reactor operator in the US, Constellation Energy, last month - the Three Mile Island agreement, to restart the Three Mile Island nuclear power plant and sell all the generated electricity to Microsoft. This agreement may incentivize the optimization and expansion of the nuclear energy supply chain, including uranium mining, nuclear fuel processing, nuclear reactor construction, and maintenance.

This agreement has shown the market the huge potential demand for clean energy, as nuclear energy, as a stable and low-carbon energy choice, may see continued growth in demand as data centers and other large energy consumers increase their electricity needs Last Wednesday, Oklo, a nuclear startup chaired by OpenAI CEO Sam Altman, announced that its first commercial micro-reactor is entering the preliminary construction phase. Oklo CEO Jacob DeWitte mentioned the significance of the restart of the Three Mile Island nuclear power plant that day, calling it a "proof" for the technology industry to see the "rising energy demand and the importance of securing safe energy supply."

DeWitte believes that the nuclear energy industry "seriously lags behind in responding to market demand." He stated that the U.S. Department of Energy has approved Oklo to begin site selection surveys for micro-reactors, focusing on infrastructure planning, environmental surveys, and geotechnical assessments. He expects Oklo to start construction at the Idaho site in 2026 and plans to have the reactor operational by 2027.

Some analysts have noted that the acceptance of nuclear energy transactions in the financing market is increasing as governments and technology giants understand that the only way to achieve ambitious net-zero carbon emission goals is not through solar and wind energy, but through nuclear energy.

After Constellation Energy reached a 20-year agreement with Microsoft to sell electricity from the Three Mile Island nuclear power plant last month, uranium mining stocks and nuclear energy concept stocks surged in the U.S. stock market. A report released by Goldman Sachs last month also mentioned the prospects of rising uranium prices.

The report stated that given the constructive view on the role of nuclear energy in the entire energy transition, Goldman Sachs believes that uranium prices may continue to gradually rise over time due to strong demand fundamentals (new reactors, restarts, and expansions) and limited expectations for supply increases by the end of this century