Hyperscalers take US nuclear industry to next level
Deals signed by Google, Amazon, and Microsoft with U.S. nuclear developers will help propel the technology into its next generation.
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Since the turn of the century, the nuclear power sector in the United States has all but stagnated, with disasters such as Chernobyl in 1986 and Fukushima in 2011 leaving many mistrustful of the industry.
This deep-rooted suspicion has led to uneven commitment from governments and investors and fewer and increasingly expensive, nuclear projects.
The global drive for net zero emissions has turned this dynamic on its head.
Contracts signed in September and October with reactor developers have delivered the most definitive demand signal to date, helping justify calls to restart or extend the life of existing reactors and granting an extra boost for U.S.-developed Generation IV advanced reactors.
The renewed interest in nuclear power has been prompted by the projected growth of data centers and artificial intelligence (AI) in development by some of the most powerful companies in the world, all of which are striving to reach carbon neutrality over the next decade.
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The power needs of data centers in the United States are predicted to rise to 11%-12% of total domestic demand in 2030 from just 3%-4% today, according to consultants McKinsey & Company.
The projected demand increase lays the foundations on which to build out U.S. nuclear capacity.
“If you can send the signal that we need to build reactors and build a lot of them, then that's when you get folks to sign up to train for these jobs, for companies to make investments into their supply chain capabilities, and build out facilities etc,” says Deputy Director for Nuclear at the Third Way think tank Alan Ahn.
“You have to have that market signal from the top down and these announcements are a massive step in the right direction in that regard.”
Global Advanced Nuclear Demonstrations Map
(Click to enlarge)
Source: Third Way, Nuclear Innovation Alliance, Clean Air Task Force, Clearpath, and Pillsbury study. For the fully interactive map, click here.
Nuclear, renewables mix
Renewable sources of power remain key, but nuclear must be working alongside, according to Vice President of Energy at Microsoft Bobby Hollis.
“We continue to strongly believe that wind, solar, geothermal, and batteries are a very important part of decarbonizing the electricity grids that support us, but we also recognize that traditional nuclear can and needs to play a very important part,” says Hollis.
Utility Constellation signed its largest-ever power purchase agreement (PPA) with Microsoft in September that will see a restart of Three Mile Island (TMI) Unit 1, shut down for economic reasons in 2019.
Unit 1 sits apart from Unit 2, which partially melted down in the worst ever nuclear accident on U.S. soil in 1979.
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Microsoft will purchase energy from the TMI Unit 1, rechristened the Crane Clean Energy Center. The unit is expected to be online by 2028, will add over 800 MW to the PJM grid, and create around 3,400 direct and indirect jobs.
To prepare for restart, the new reactor will need Nuclear Regulatory Commission (NRC) approval, state and local agency permits, and significant investments to restore the turbine generator, main power transformer, and cooling and controls systems, Constellation says.
Financial details of the 20-year PPA have not been disclosed, but brokerage analysts Jefferies estimate that Microsoft could pay Constellation around $110-115 per MWh, a premium for the PJM region where wholesale prices are mostly below $100/MWh.
Hollis, who cannot comment on specific financial details, says many numbers have been overstated and often don’t take into account the already existing infrastructure and skilled personnel at the site, as well as the location near the company’s operations.
Hollis is also unconcerned that prices might spiral, as they have at other nuclear sites such as Vogtle in Georgia.
“That's the reason that we do it as a power purchase agreement, of course, because that locks in our price. We know that how we pay and partner on that transaction, is based on the output of the facility,” Hollis says.
Iteration advantage
Google, meanwhile, has signed an accord with advanced reactor developer Kairos Power for projects totaling 500 MW by 2035, also under a PPA.
The contract is the first corporate agreement in the United States for multiple deployments of a single advanced reactor.
The commercial demonstration of Kairos Power’s 140 MWe advanced reactor, the KP-FHR, is expected “as close to 2030 as possible”, Chief Executive Officer and Co-founder Mike Laufer told Reuters Events Nuclear in August.
The tech giant, aware that advanced nuclear is still to prove itself through demonstrations, is especially interested in Kairos Power’s iterative approach to nuclear rollout which it says reduces risk factors with smaller demonstrations.
“Advanced nuclear small modular reactors (SMRs) are not being deployed fast enough, due to a number of barriers to commercialization. That’s why we’re procuring electricity from an ‘orderbook’ of multiple reactors designed by Kairos to accelerate these repeated SMR deployments that are needed to lower costs and bring their technology to market,” Google said in an emailed response to questions.
Google, which aims to operate its data centers and office campuses on carbon-free energy on every grid it operates by 2030, has also focused on renewables, such as a partnership with start-up Fervo to develop a first-of-a-kind geothermal project in Nevada.
“There’s no single one approach that we're taking as a company at Google. We're really looking at a portfolio of approaches and a portfolio of technologies,” Senior director for Energy and Climate at Google Michael Terrell said during a roundtable discussion of the Kairos deal.
Financing SMRs
Amazon’s approach hits at the heart of the plan to expand advanced nuclear, announcing a Series-1 financing round of around $500 million for X-energy, an investment it says will help fund the completion of its next generation Xe-100 reactor design and licensing and the first phase of its TRISO-X fuel fabrication facility in Oak Ridge.
The two companies are also collaborating to bring over 5 GW of new power projects across the United States through direct project investments and long-term power purchase agreements to help power Amazon’s operations.
The first project will support a four-unit 320-MW plant with utility Energy Northwest, with an option to increase that to 12 units and 960 MW, the company said.
The lack of state commitment to nuclear power over the last two decades has left financiers wary and loan deals often prohibitively expensive, making X-energy’s deal with Amazon, and plans to showcase the Xe-100’s dual heat and power functions at chemical company Dow’s UCC Seadrift Operations manufacturing site in Texas, vital for deployment.
By Paul Day