Amazon's Investment in Small Modular Nuclear Reactors
The trend of utilizing nuclear power for the future of data centers is becoming increasingly prevalent. Following Google's recent partnership with Kairos Power for small modular reactors, Amazon has now committed to investing over $500 million to develop similar reactors, as reported by CNBC.
Amazon's Projects and Partnerships
Amazon Web Services (AWS) has launched three projects across the United States, from Virginia to Washington State. AWS has teamed up with Dominion Energy to consider constructing a small modular reactor (SMR) near the North Anna nuclear station in Virginia. SMRs, which do not emit carbon, have a smaller footprint and quicker construction times compared to traditional reactors.
According to CNBC, Virginia is home to nearly half of the U.S. data centers, with Northern Virginia's "Data Center Alley" in Loudoun County processing 70% of the world's internet traffic daily.
Dominion Energy's Contribution
Dominion Energy provides 3,500 megawatts to 452 data centers across Virginia, with the majority located in Data Center Alley. Typical data centers require 30 megawatts or more, and Dominion is now receiving requests for 60 to 90 megawatts. It anticipates demand to increase by 85% over the next 15 years. AWS's new SMRs are expected to contribute at least 300 megawatts of power to the region.
Matthew Garman, CEO of AWS, stated that they foresee the need for gigawatts of power in the coming years. He added that there will not be enough wind and solar projects to meet these needs, making nuclear a great opportunity. He also mentioned that the technology of SMRs is advancing to a point where it will be safe and easy to manufacture in a much smaller form.
Virginia's Support for SMRs
Virginia Governor Glenn Youngkin expressed his support for SMRs, stating that they will play a crucial role in positioning Virginia as a leading nuclear innovation hub. He also commended Amazon Web Services' commitment to this technology and their partnership with Dominion as a significant step forward in meeting the future power needs of a growing Virginia.
Google and Other Companies' Shift Towards Nuclear Energy
Earlier this week, Google announced plans to purchase power from Kairos Power’s small modular reactors (SMRs) as part of an industry-wide shift towards nuclear energy to meet the increasing demands of data centers. By buying energy from multiple SMRs, Google aims to send a strong market signal while supporting long-term commercialization.
Additionally, Oklo, a SMR company backed by Sam Altman, announced that it had received key approval from the U.S. Department of Energy for its Conceptual Safety Design Report (CSDR) for the Aurora Fuel Fabrication Facility at Idaho National Laboratory (INL), where it plans to build.
U.S. Government's Support for Nuclear Power
Earlier this month, it was reported that the U.S. had finalized a $1.5 billion loan to revive Holtec's Palisades Nuclear Plant. The Biden administration aims to triple U.S. nuclear power capacity as demand increases and climate concerns grow.
Pennsylvania Governor Josh Shapiro has also been advocating for the quick reopening of Three Mile Island. Following Microsoft's agreement to purchase power from the dormant nuclear plant, Shapiro urged regulators to prioritize the reactor's connection to the electrical grid.
Implications for the Future
The recent developments from Amazon and Google provide significant momentum for the "Next AI Trade", which was outlined in April as a favorite long-term trade, and where various investment opportunities for powering up America were discussed.
The impressive returns of the trade in 2024 are just the beginning. As more capital is allocated to "those who provide the electricity to those who sell the picks and shovels for the next gold rush", this sector will outperform every other segment of the market. The biggest winners will not be those who bet on the revolutionary technology that is AI, but those who backed the more primitive requirement: the electricity needed to power it.
Bottom Line
The shift towards nuclear power to meet the growing demands of data centers is becoming increasingly evident, with tech giants like Amazon and Google leading the way. This trend not only signifies the potential of nuclear energy but also highlights the crucial role it may play in the future of technology and AI. What are your thoughts on this development? Do you think this is a sustainable solution for the future? Feel free to share this article with your friends and discuss it further. Don't forget to sign up for the Daily Briefing, which is available every day at 6pm.
