How can nuclear power solve the energy consumption dilemma of AI? HSBC: Restart old nuclear power plants, develop small nuclear power plants

With the rise of AI, the power demand of data centers has increased significantly.

On October 16th, Eastern Time, HSBC released a research report pointing out that according to data published by EPRI in May this year, by 2030, data centers may consume 9% of the electricity in the United States, more than twice the current amount. The future power shortage may become inevitable, so some tech giants are currently exploring new power supply options and are eyeing nuclear energy.

Why Restart Old Nuclear Power Plants?

Firstly, according to data from the Energy Information Administration (EIA), nuclear energy is the most reliable energy source, providing a stable 93% of maximum power every year without producing carbon dioxide. Its reliability is four times that of solar energy and three times that of wind energy.

Secondly, the United States and 23 other countries reached a consensus at the COP28 conference in 2023 to triple nuclear power generation capacity by 2050.

Although most small modular reactors (SMRs) have not yet been approved by regulators, and building new nuclear power plants is time-consuming and costly, often leading to years of delays and severe budget overruns. Therefore, Kelly Trice, the CEO of Holtec, suggests that restarting old reactors is much simpler, more economical, and faster than building new nuclear power plants.

The United States has the world's largest cluster of nuclear power plants, with a total of 94 nuclear reactors providing 18.6% of the country's electricity demand in 2023. With the growth of data centers and electric vehicles, the North American Electric Reliability Corporation (NERC) has significantly increased its forecasts for peak power demand.

NERC's CEO, Jim Robb, stated that demand in the coming decades is expected to be twice that of five years ago. To meet these stable energy needs, nuclear energy is an important choice, especially with the increasing focus on nuclear energy in the context of supporting the development of data centers and artificial intelligence.

Tech Giants Betting on Nuclear Energy

In September this year, the Financial Times reported that Microsoft and the largest nuclear reactor operator in the United States, Constellation Energy, signed a power agreement to restart a reactor at the Three Mile Island nuclear power plant in Pennsylvania. Constellation Energy stated that the Nuclear Regulatory Commission (NRC) approval process is expected to be completed by 2027, with an estimated cost of about $1.6 billion to restart the nuclear power plant, expected to be operational by 2028 and run at least until 2054.

According to the agreement, Constellation Energy will sell all the electricity generated by the restarted Three Mile Island nuclear power plant to Microsoft for the next 20 years. The plant has the capacity to generate 835 megawatts of electricity, equivalent to powering 800,000 homes In addition, earlier this year, CRN reported that Amazon plans to acquire a data center campus near a nuclear power plant in Pennsylvania. Amazon aims to develop a 960-megawatt data center in the area.

In October this year, Google announced that it will sign the "world's first corporate agreement" to purchase nuclear power from multiple small modular reactors (SMRs) manufactured by Kairos Power. The first batch of SMRs is expected to be operational by 2030, with more coming online by 2035, providing 500 megawatts of power to the U.S. grid.

Global investment in SMRs is increasing

In September last year, the Financial Times reported that 14 major financial institutions globally have committed to increasing their support for nuclear energy, including Bank of America, Barclays, Morgan Stanley, and Goldman Sachs. Since the first wave of nuclear power construction in the 1970s and 1980s in the United States, fundraising for building nuclear power plants has been a challenge and a barrier to the commissioning of new nuclear plants.

In September this year, Blackstone Group, Microsoft, Global Infrastructure Partners (GIP), and MGX (backed by NVIDIA) announced the establishment of a partnership called the Global AI Infrastructure Investment Partnership (GAIIP) to invest in new and expanding data centers. The partnership aims to unlock $30 billion in private equity capital and up to $100 billion in total investment, including debt financing.

Furthermore, global investment in SMRs is increasing and may become a significant addition to nuclear power in the future. The high social acceptance of SMRs compared to conventional nuclear reactors, due to lower capital costs, inherent safety and waste management attributes, and lower project risks, has attracted significant private investment.

For example, Romania secured up to $275 million in public-private support from the United States, Japan, South Korea, and the United Arab Emirates at the G7 summit in 2023, with plans to deploy an SMR project by 2029. The U.S. Department of Energy has initiated the Advanced Reactor Demonstration Program, with NuScale expected to complete the first SMR in the United States around 2030.

France plans to invest €1 billion in developing SMR technology, while Ukraine has reached a cooperation agreement with the U.S. energy company Holtec International to install up to 20 SMRs in Ukraine by 2029.

Moreover, as most components of SMRs can be built in factories, on-site work mainly involves module assembly, reducing project risks and shortening construction time. Rolls-Royce has made significant progress in SMR technology, with its CEO stating that if the UK can take a lead in regulation, the country could capture 60% of the SMR supply chain