Nuclear SMRs Are All Set To Power AI Energy Demands
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The explosion of AI and data centers has created an energy crisis that's keeping utility executives up at night.
With ChatGPT queries consuming 10 times more energy than Google searches, and data centers expected to consume 8% of global electricity by 2030, we're facing a fundamental mismatch between energy demand and supply.
Enter Small Modular Reactors (SMRs) – the nuclear technology that might just save the day.
Small Modular Reactors are exactly what they sound like: smaller versions of traditional nuclear reactors that are built in modules.
Unlike conventional nuclear plants that typically generate 1,000+ megawatts, SMRs produce between 20-300 megawatts per module. Think of them as the LEGO blocks of nuclear power – you can stack them together to meet your exact energy needs.
The "small" part refers to their physical footprint and power output, while "modular" means they're manufactured in factories and assembled on-site, rather than being custom-built from scratch like traditional reactors. This approach fundamentally changes the economics and deployment timeline of nuclear power.
While the concept isn't new, SMRs have been brewing in the nuclear community since the 1950s. The U.S. Navy has been using small reactors to power submarines and aircraft carriers for decades – that's essentially where the modern SMR concept was born.
The real push for commercial SMRs started in the early 2000s when the nuclear industry began recognizing the limitations of building massive, billion-dollar plants. The 2011 Fukushima disaster accelerated interest in inherently safer designs, and the recent AI boom has created the perfect storm of demand for clean, reliable baseload power.
Honestly, commercial SMRs are still in their infancy. Russia's floating nuclear power plant Akademik Lomonosov, which uses two 35-MW reactors, is probably the closest thing to a commercial SMR in operation today. China has been testing their ACP100 design, and several demonstration projects are underway globally.
The real action is happening in the development and licensing phase. The U.S. Nuclear Regulatory Commission has been working with companies like NuScale Power to certify SMR designs, with the first approvals coming through in recent years.
SMRs are defined as nuclear fission reactors with a capacity of about 300 MWe or less.
As the name suggests these reactors would have two main attributes—small and modular. These are envisaged to be capable of being centrally manufactured at a factory and then transported to the desired site for assembly/ installation.
Much like a machine, the reactor would arrive at a site, be plugged in and start producing electricity. They would also offer the possibility of the addition of multiple similar reactors when desired.
Also, these could be placed on land, on a ship for off-shore deployment (which are known as floating nuclear power plants) or even in an underground or submerged environment.
Over 70 SMR designs are being developed around the world today. At different stages on the drawing board, these designs range from being slightly modified versions of existing reactors to those involving completely new technologies.
Staying abreast of the high level of activity around the new ideas, the International Atomic Energy Agency (IAEA) has set up the SMR Regulators’ Forum to help countries share information on issues of common concern. It published a Technology Roadmap for Small Modular Reactor Deployment in 2021 that identifies, evaluates, and promotes collaboration and knowledge sharing amongst technology developers, industry, users, and regulatory bodies.
The advantages of SMRs over traditional nuclear plants are compelling, especially for AI and data center applications:
Cost and Speed: Traditional nuclear plants cost $10-20 billion and take 10-15 years to build. SMRs can be manufactured in factories and deployed in 3-5 years at a fraction of the cost. For a data center company that needs power in 2-3 years, this timeline advantage is huge.
Scalability: Need 50 MW today and 200 MW in five years? Start with one module and add more as demand grows. Try doing that with a conventional 1,200 MW plant.
Safety: Most SMR designs are inherently safer. They use passive safety systems that don't require external power or human intervention to shut down safely. Some designs literally cannot melt down – the laws of physics prevent it.
Flexibility: SMRs can be deployed closer to where power is needed, reducing transmission losses and infrastructure costs. Perfect for remote data centers or edge computing facilities.
Grid Independence: Large nuclear plants can destabilize smaller grids when they go offline. SMRs provide more manageable chunks of power that are easier to integrate.
One of the primary goals of SMRs is to replace coal-fired power plants, which are major contributors to greenhouse gas emissions and air pollution.
By transitioning to SMRs, carbon emissions could be reduced while ensuring a reliable energy supply. The flexibility and scalability of SMRs make them well-suited for replacing aging coal plants, especially in regions where renewable energy sources alone may not be sufficient to meet demand consistently.
SMRs Meet AI
The marriage between SMRs and AI infrastructure makes perfect sense when you look at the numbers. A typical hyperscale data center consumes 50-100 MW of power continuously. That's right in the sweet spot for SMR deployment.
AI workloads are particularly demanding because they require constant, reliable power. You can't just shut down a large language model training run when the wind stops blowing. SMRs provide that 24/7 baseload power that renewables simply can't match without massive battery storage.
Microsoft has already signed agreements to restart Three Mile Island's Unit 1 to power their AI operations. Google is exploring nuclear partnerships. Amazon Web Services is looking at SMRs for their data centers. These aren't experiments – they're strategic moves to secure the power needed for the AI revolution.
The economics work too. While nuclear power might cost more per kWh than natural gas today, the total cost of ownership for data centers includes reliability, carbon footprint, and long-term price stability. SMRs excel in all these areas.
The SMR market is projected to grow from virtually zero to $300 billion by 2040. That's not hype – that's driven by real demand from AI companies, data centers, and industrial users who need clean, reliable power.
We're likely to see the first commercial SMRs powering data centers by 2030. The early adopters will gain a significant competitive advantage in the AI race by securing abundant, clean power while their competitors struggle with grid constraints and carbon commitments.
The technology is also evolving rapidly. Next-generation SMRs will use advanced fuels, operate at higher temperatures, and integrate better with industrial processes. Some designs can even provide both electricity and process heat – perfect for cooling data centers.
Here's where things get interesting from a technical standpoint.
Most advanced SMR designs require HALEU – uranium enriched to between 5-20%, compared to the 3-5% used in conventional reactors. This higher enrichment allows for smaller reactor cores, longer operating cycles, and more efficient power generation.
HALEU is crucial for SMRs because it enables the compact designs that make factory manufacturing possible. With HALEU, you can build a reactor core that fits in a shipping container while still producing meaningful amounts of power. It's like the difference between a smartphone and a 1980s car phone – same basic function, but the advanced technology makes it practical for widespread deployment.
The challenge?
HALEU supply is currently limited. Russia has been the primary supplier globally, but recent geopolitical tensions have created supply chain issues. The U.S. is rapidly building domestic HALEU production capacity, with companies like Centrus Energy leading the effort. The Department of Energy is investing heavily in HALEU infrastructure because they recognize it's essential for SMR deployment.
For data center operators, HALEU-fueled SMRs offer longer fuel cycles – potentially 10-20 years between refueling compared to 18-24 months for conventional reactors. This means less downtime and more predictable operations, which is exactly what you want when powering critical AI infrastructure.
(I was made aware of HALEU by one of the Substack authors
)Key Players in the SMR Space
The SMR industry has attracted some serious players:
NuScale Power leads the pack with the first SMR design certified by the U.S. NRC. Their VOYGR plants can scale from 50 MW to 600 MW using their 77 MW modules.
Rolls-Royce is developing their UK SMR, leveraging decades of naval reactor experience. They're targeting 470 MW plants using their modular approach.
TerraPower, backed by Bill Gates, is working on their Natrium reactor that combines SMR concepts with molten salt storage.
X-energy is developing the Xe-100, a high-temperature gas-cooled reactor that's particularly suitable for industrial applications.
Westinghouse has their AP300 design, scaling down their proven AP1000 technology.
Several Chinese companies including China National Nuclear Corporation are also aggressively developing SMR technology for domestic and international markets.
The deployment landscape is heating up fast. NuScale's first plant is under construction in Idaho, with operation expected by 2030. Romania has signed agreements for NuScale SMRs. Poland is evaluating multiple SMR technologies for their nuclear expansion.
The UK is investing heavily in SMR development, with Rolls-Royce leading a consortium to deploy SMRs across Britain. Canada has a robust SMR program with multiple provinces evaluating different technologies.
In the U.S., several utilities are exploring SMR deployment, often in partnership with tech companies. The Department of Energy is providing significant funding for SMR development and demonstration projects.
Major Deployers and Their Strategies
Tech Giants: Microsoft, Google, and Amazon are the most aggressive in securing nuclear power for their AI operations. They're not just buying power – they're partnering with developers and even investing in SMR companies.
Utilities: Companies like Duke Energy, Dominion Energy, and Ontario Power Generation are incorporating SMRs into their long-term planning. They see SMRs as a way to add nuclear capacity without the massive financial risk of conventional plants.
Industrial Users: Chemical companies, mining operations, and other energy-intensive industries are also exploring SMRs for both electricity and process heat.
Government Programs: The U.S. Department of Energy, UK government, and Canadian federal government are actively supporting SMR deployment through funding, research, and regulatory support.
SMRs represent the convergence of three major trends:
The need for clean energy,
The demand for reliable baseload power, and
The explosion of AI and data center growth.
While the technology is still emerging, the momentum is undeniable.
For the AI industry, SMRs offer a path to energy independence and carbon neutrality without sacrificing the reliability needed for compute-intensive workloads. For the nuclear industry, SMRs provide a way to remain relevant in a world increasingly dominated by renewables.
The next decade will be crucial. The companies and countries that successfully deploy SMRs will have a significant advantage in the AI economy. Those that don't may find themselves constrained by grid limitations and carbon commitments.
The nuclear renaissance is here, and it's powered by silicon as much as uranium. SMRs aren't just the future of nuclear power – they're the foundation of the AI-powered economy we're building today.
About the author: Rupesh Bhambwani is a technology enthusiast specializing in the broad technology industry dynamics and international technology policy.
When not obsessing over nanometer-scale transistors, energy requirements of AI models, real-world impacts of the AI revolution and staring at the stars, he can be found trying to explain to his relatives why their smartphones are actually miracles of modern engineering, usually to limited success.
That's a great write up. Thanks for sharing your research and I also appreciate the shout out!