Amazon.com (AMZN.O) is significantly increasing its investment in nuclear power, signing three agreements to develop small modular reactors (SMRs). This move comes as major tech companies seek new energy sources to meet the rising electricity demands of their data centers.
Amazon is positioning itself at the forefront of this trend, funding a feasibility study with X-Energy for an SMR project near a Northwest Energy site in Washington state. While financial specifics remain undisclosed, Amazon will have the option to purchase electricity from four modules under the agreement. Energy Northwest, a consortium of state public utilities, has the option to add up to eight additional 80 MW modules. This could create a total capacity of up to 960 MWs, enough to power over 770,000 U.S. homes.
“Our agreements will encourage the construction of new nuclear technologies that will generate energy for decades to come,” said Matt Garman, CEO of Amazon Web Services.
SMRs are designed to be built in factories, potentially reducing construction costs compared to traditional reactors, which are built on-site. Critics, however, question whether SMRs will be able to achieve the necessary economies of scale to be cost-effective.
Nuclear power offers a potentially significant solution, generating electricity with virtually zero greenhouse gas emissions and offering high-paying union jobs, which garners support across the political spectrum. However, no SMRs currently operate in the U.S. NuScale (SMR.N), the only U.S. company with an SMR design license, had to halt its first project last year.
Furthermore, a lack of a final repository for long-lasting radioactive nuclear waste remains a challenge for SMRs.
Scott Burnell, a spokesperson for the U.S. Nuclear Regulatory Commission, stated that the regulator has not yet received “no specifics” about the planned SMRs.
This year has seen a surge in agreements between tech firms and nuclear companies as artificial intelligence boosts U.S. power demand, a trend that is expected to continue. U.S. data center use is projected to roughly triple between 2023 and 2030, necessitating around 47 gigawatts of new generation capacity, according to Goldman Sachs estimates. Goldman assumed natural gas, wind and solar power would fill the gap.
Amazon is also leading a $500 million funding round to support X-Energy’s SMR development. The companies plan to bring over 5 gigawatts online in the United States by 2039, which they claim will be the largest commercial deployment target for SMRs to date.
Finally, Amazon has also entered into an agreement with Dominion Energy (D.N) to explore developing an SMR project near an existing power station in Virginia. This roughly 300-megawatt project would address increasing power demands in the region, where energy needs are expected to jump 85% over the next 15 years.
Senator Mark Warner of Virginia expressed optimism about these recent developments, saying that they could “crack the code” in bringing SMRs to the U.S. He noted that he often speaks with international parties interested in purchasing SMRs from U.S. companies, but that those parties are wary because none have been constructed in the U.S.
Google (GOOGL.O) and Kairos Power entered into an agreement to bring an SMR online by 2030, with further deployments through 2035. In March, Amazon acquired a nuclear-powered data center from Talen Energy (TLN.O). Microsoft (MSFT.O) and Constellation Energy (CEG.O) signed a power deal to help restore operations at a unit of the Three Mile Island plant in Pennsylvania last month.
