#190 Tech Giants and Asset Fund Managers are bringing Nuclear Power Back to Life.

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Oct 12, 2024

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In 1979, the world held its breath as the words "NUCLEAR NIGHTMARE" blared from the Time magazine headlines.

One of the reactors at the Three Mile Island nuclear plant in Pennsylvania, US had suffered a partial meltdown, sending radioactive gas into the atmosphere and sparking panic. The governor ordered the evacuation of vulnerable residents within a five-mile radius, and for days, it seemed like a disaster on the scale of Chernobyl was about to unfold.

But in the end, there were no injuries, no deaths, and—apart from a major PR nightmare—no long-term damage.

Two decades later, the second reactor is still operational and enjoying strong local support. Yet, it wasn't another safety issue that led to the reactor's shutdown in 2019; it was the simple economics of competition from cheap shale gas.

Now, in a plot twist straight out of a dystopian tech novel, Three Mile Island is being resurrected.

On September 20, 2024, Microsoft and Constellation Energy signed a deal to bring the shuttered reactor back online by 2028, to the tune of $1.6 billion. And guess who’s buying all that carbon-free power for the next two decades? Microsoft, the same company that’s looking to feed its ever-hungry AI data centers with clean, reliable electricity.

Could this be the start of nuclear power’s comeback?

The Three Mile Island Incident: A Brief History

For those unfamiliar with the infamous incident, the Three Mile Island nuclear accident took place on March 28, 1979. A combination of equipment failures, operator errors, and design flaws caused a partial meltdown of the reactor core. Although it didn’t lead to the widespread devastation many feared, it became a watershed moment in American nuclear energy, marking a sharp decline in public confidence and regulatory oversight.

Three Mile Island remains a pivotal moment in nuclear history—not for its catastrophe, but for its influence on nuclear energy policy and safety protocols. The incident sparked a wave of reforms, from the creation of the Institute of Nuclear Power Operations (INPO) to the tightening of safety regulations.

Now, ironically, that very site may lead the charge in a nuclear revival.

Big Tech’s Nuclear Play: AI and Clean Power

Fast forward to today, and nuclear power is no longer the boogeyman it once was. It’s becoming a darling of Big Tech—firms like Microsoft, Amazon, and Google are scrambling for carbon-free energy to run the vast data centers that power AI, the cloud, and other modern tech.

Last month Microsoft teamed up with Black Rock, an asset manager, and other investors to launch a $30bn infrastructure fund devoted to AI. Mr Smith, who says the fund’s firepower could rise to $100bn once debt is added, expects it to finance nuclear projects, among other things.

Brad Smith, Microsoft's president, admits that their carbon-neutral promises made in 2020 were ambitious. Now, thanks to AI's soaring power demands, they expect to use five to six times more electricity by 2030 than initially anticipated.

Enter nuclear power. Unlike wind or solar, nuclear plants provide a steady supply of electricity 24/7, making them ideal for data centers.

A single nuclear plant can generate up to a gigawatt of power—enough to fuel the relentless growth of AI. To achieve the same with solar panels would require millions of them, which, let’s be honest, is less practical (and sounds like a Bond villain's lair).

But there’s a catch.

While Microsoft is digging deep into its pockets, reviving mothballed reactors like Three Mile Island isn’t a widespread solution. Most decommissioned reactors in the U.S., Europe, and Japan aren’t suited for a quick revival. New nuclear plants will have to be built, and that’s where the headaches begin.

These projects cost astronomical amounts—just look at Georgia’s Vogtle nuclear plant, America’s first new reactor in decades. Initially estimated to cost $14 billion, it ended up with a $35 billion price tag and was completed seven years late.

But let’s keep in mind that the development and deployment of nuclear power has led to the most successful and fast "energy transition" in the last century, leading to the installation of 340 GWe over 40 years, accounting for around 18% of the global electricity generation at its peak at the end of the 1990s.

Although USA is home to 94 conventional nuclear reactors, about a fifth of the world’s total, it has built few in recent decades. There are, however, over 60 nuclear reactors under construction worldwide, mostly in China and Russia but increasingly in other places, too.

In July, for instance, the Czech Republic finalised plans for a $17bn nuclear project. And interest in small modular reactors ( SMRs), which are cheaper and quicker to build, is surging everywhere

The Rise of Small Modular Reactors: How They Work and Why They Matter

Here’s where Small Modular Reactors (SMRs) come into the picture. SMRs are the next big thing in nuclear energy—and, dare I say, they’re the iPhone of reactors: smaller, more efficient, and designed for modern needs. (Disclaimer - I don’t own an iPhone)

So how do they work? SMRs are basically scaled-down versions of traditional nuclear reactors, but instead of being enormous, custom-built installations, SMRs are modular. That means they can be manufactured in factories and then shipped to the location where they will be assembled, making the construction process quicker and less prone to delays.

Each unit typically generates between 50 and 300 megawatts (MW) of power, compared to the 1,000 MW or more that conventional reactors can produce.

What’s particularly exciting about SMRs is their ability to be deployed flexibly. Multiple SMRs can be stacked together to meet increasing energy demands, or deployed in remote areas that aren’t connected to large grids. Plus, because they are smaller and simpler in design, they require less upfront capital investment, making them more appealing to private investors and governments alike.

Here’s the clincher: SMRs are designed to be safer than traditional reactors.

They incorporate advanced safety features that reduce the likelihood of human error or mechanical failure. Many of these reactors use passive safety systems, which means that if something goes wrong, they automatically shut down or cool down without the need for operator intervention. For instance, some designs use natural convection to cool the reactor in the event of a power failure, eliminating the need for external electricity.

Additionally, many SMR designs include underground construction, which makes them more secure against both natural disasters and external attacks. Some even use liquid metal or gas instead of water as a coolant, reducing the risk of the kinds of overheating accidents that caused problems at Three Mile Island and Fukushima.

SMRs: A Safer Bet?

The debate over the safety of nuclear power will always persist, but SMRs offer a tantalizing possibility: the ability to deliver clean, reliable, carbon-free power without the same level of risk as traditional reactors.

In fact, the U.S. Department of Energy and the Nuclear Regulatory Commission (NRC) have both shown confidence in the technology, approving the development of several SMR designs, including one from NuScale Power, the first-ever SMR to receive U.S. regulatory approval.

That’s why tech titans are betting big on SMRs. TerraPower, backed by Bill Gates, is already building its first SMR plant in Wyoming, while Sam Altman’s Oklo plans to deploy several by 2030.

Even Oracle has unveiled a gigawatt-scale data center powered by three SMRs, and Google has expressed interest in using the technology for its data centers as well.

Of course, it’s not all smooth sailing. SMR technology is still unproven at scale, and even the best-laid plans for conventional reactors face delays and ballooning costs. The nuclear industry has a serious supply chain issue—decades of stagnation outside of China and Russia have left the West without enough expertise or infrastructure to quickly ramp up production.

Chris Womack, CEO of Southern Company, the owner of the Vogtle plant, says that public support is essential. “The government must provide some cost-overrun insurance,” he suggests. And he’s not wrong—streamlining the notoriously long permitting processes would also help speed things along.

Governments, at least, seem to be warming up to nuclear power again.

At a recent UN Climate Week event, officials from over 20 countries reaffirmed their commitment to tripling global nuclear output by 2050. And to sweeten the deal, 14 major banks have pledged to finance new nuclear projects.

Even Mohamed Al Hammadi, head of the Emirates Nuclear Energy Corporation, said that AI’s surge in energy demands has triggered a "step change" in momentum across the nuclear sector.

India is also adding 21 new nuclear reactors to boost capacity by 15,300 MW.

The Nuclear Renaissance? Don’t Write Off the Future Yet

So, is this the dawn of a new nuclear age? Possibly.

But it’s going to take a mix of technological innovation, financial wizardry, and government backing to make it work. SMRs may well hold the key to this revival, offering a safer, more adaptable, and economically feasible solution for the energy needs of the future.

In the meantime, one thing is clear: If we want AI to continue transforming the world without turning it into a carbon-emitting hellscape, we’re going to need more than just a few million solar panels.

It might be time to embrace our inner tech-fueled nuclear ambitions. After all, what’s cooler than combining AI and nuclear energy to power the future?

It’s like we’re living in a sci-fi movie—minus the killer robots (hopefully).