• by Laurie Sullivan , Staff Writer @lauriesullivan, October 16, 2024

Amazon has signed three agreements to support the development of nuclear-energy projects that would include the construction of several Small Modular Reactors (SMRs), an advanced type of reactor with a smaller physical footprint.

Matt Garman, CEO of Amazon Web Services (AWS), believes nuclear is a safe source of carbon-free energy that can help power operations and meet the growing demands of customers, while helping the company move toward its climate pledge commitment to be net-zero carbon across its operations by 2040.

Barclays Research estimates data centers account for 3.5% of U.S. electricity consumption today, and electricity use could rise above 5.5% in 2027 and more than 9% by 2030.

The research firm agrees that the “rapacious growth” of AI will lead to a dramatic increase in demand for energy and competition for land with access to utilities in the U.S.

AI now powers nearly all of advertising's services. And if it doesn't power the services, the technology is integrated into them -- from media buying and serving ads to supporting predictive optimization, as well as image and voice generation for content. The list has become too long to post here.

With the earnings season underway, analysts have begun to suggest that quarterly reports could better gauge return on investments from generative AI. 

When asked about ROI, Gadjo Sevilla, Emarketer business analyst covering technology and innovation, said “energy and infrastructure, including AI chips and servers, are the limiting factors of AI expansion so a steady supply of both guarantees growth and scale which could drive down costs through time and result in higher ROI.”

Without delving into this type of energy, “services will cost more and likely be limited to wealthier customers,” Sevilla said. “This would slow adoption and result in the U.S. losing its advantage in AI.”

Sevilla sees two trends unfolding this year around AI data centers. The first is companies like Amazon, Microsoft, and Google are building overseas to expand AI to other regions. Aside from benefitting from incentives and tax cuts, they also get to tap into the energy grids of those new regions.

The other trend points to existing power and energy grids in the U.S. that are already overburdened, which is pushing this move to reignite nuclear as a clean source of energy that can conceivably cover AI’s requirements in the near future.

"One of the fastest ways to address climate change is by transitioning our society to carbon-free energy sources, and nuclear energy is both carbon-free and able to scale," Amazon’s Garman wrote in a blog published Wednesday.

Investments are being made in Energy Northwest, a Washington State consortium public utilities company; X-energy, a developer of next-generation SMR reactors and fuel; and Dominion Energy in Virginia to explore the development of an SMR project near Dominion’s existing North Anna nuclear power station. 

Amazon also signed an agreement to co-locate a data center next to the Talen Energy’s nuclear facility in Pennsylvania, which will power the company’s data centers with carbon-free energy to help preserve the existing reactor.

Meeting carbon-neutral goals has been a concern for all AI titans, as the use of energy continues to soar. Experts say Nuclear offers a clean alternative.

On Monday, Google announced an agreement with Kairos Power to purchase nuclear energy from multiple SMRs, with a goal to bring the plant online by 2030. Additional reactor deployments are planned through 2035.

AI technologies need a new energy source to power “major scientific advances” and improve services for businesses and customers,” Michael Terrell, senior director of energy and climate, wrote in a post on Monday.

Last month, Microsoft announced a deal with Constellation Energy to re-open Pennsylvania's Three Mile Island nuclear plant. The agreement would let Microsoft purchase the entirety of the plant's roughly 835 megawatts of energy generation -- which, pending regulatory approval, the company estimates is enough to power 800,000 homes for 20 years starting in 2028.

Even before that, Gates' company TerraPower in June broke ground on a nuclear power plant in Kemmerer, Wyoming.

When complete, the power plant will be smaller than traditional fission nuclear power plants and use sodium instead of water to cool the reactor's core.

Gates and the U.S. Department of Energy are the two main backers of the $4 billion project, reports a local media outlet. Gates invested about $1 billion.

Reconditioning the plant from coal to nuclear will revive the declining town, which is known as the Lincoln County seat. 

In January 2024, the International Energy Agency (IEA) issued its forecast for global energy use during the next two years. For the first time, projections for electricity consumption associated with data centers, cryptocurrency, and artificial intelligence were included.

The IEA predicted the need for energy to run AI could double by 2026, and that recent developments in the global nuclear-power sector could make a difference.