Shares of nuclear energy corporations rose to record highs this week after Amazon and Google struck landmark power deals, boosting efforts to begin up the primary small modular reactors within the United States.
Share prices of U.S.-listed SMR developers Oklo Inc and NuScale Power rose 99 percent and 37 percent, respectively, after rivals X-energy and Kairos Power, two private SMR developers, announced financing deals. Shares of Cameco, Oklo, NuScale, Constellation Energy and BWX Technologies all traded at record highs throughout the week.
The contracts support the deployment of as much as a dozen next-generation reactors to supply low-carbon power to Amazon and Google's energy-hungry artificial intelligence data centers.
Investors viewed the announcements as evidence that the nuclear renaissance was gathering pace after a slump following the Fukushima accident in Japan in 2011.
The proliferation of information centers is driving historic growth in U.S. electricity demand and undermining efforts to scale back dependence on fossil fuels and cut carbon emissions.
Shares of Constellation, which operates the most important fleet of conventional reactors within the U.S., have greater than doubled for the reason that start of the 12 months.
The company signed a 20-year power cope with Microsoft last month that may result in the reopening of the Three Mile Island nuclear power plant in Pennsylvania. The site was the scene of the worst nuclear accident in US history, wherein one in every of the reactors partially melted.
Shares of uranium producer Cameco have risen 38 percent this 12 months, while shares of core components supplier BWX Technologies have risen 65 percent.
Reactor corporations “have been saying for a while that they’re needed to satisfy the boom in AI energy demand, but nobody looked as if it would imagine them,” said Seth Grae, chief executive of nuclear fuel developer Lightbridge Corporation and chairman of the International Council of the American Nuclear Society.
“These large investments show that the technology industry doesn’t imagine that renewable energy and batteries can provide sufficiently stable or low-cost electricity and that nuclear power is required,” he said.
Until recently, investors have been reluctant to finance the introduction of small reactors, touted by advocates as smaller, safer and more efficient than large nuclear reactors. Concerns over the industry's performance in delivering projects on time and inside budget, coupled with high rates of interest and a scarcity of shoppers willing to underwrite projects, had slowed progress.
Last 12 months, X-energy was forced to shut a $1.8 billion deal to go public through a special purpose vehicle as a result of “difficult market conditions.” Shortly thereafter, NuScale announced plans to construct the primary small reactor within the United States. Not enough utilities expressed interest in buying power from there after the corporate raised prices by greater than 50 percent to $89 per megawatt hour in two years.
“The dilemma for the (small reactor) industry was that customers didn't want to join 'reactor primary' because constructing it’s costlier and riskier than constructing subsequent reactors,” said Marc Bianchi, an analyst at TD Cowen.
Amazon and Google's decisions to speculate in small reactors reflect their must source reliable, low-cost and clean electricity to power a brand new wave of AI data centers. According to Wood Mackenzie, corporations announced recent data centers with a complete capability of virtually 24 gigawatts in the primary half of 2024, greater than triple in comparison with the identical period last 12 months.
“It’s not nearly replacing the present fossil generation, we’d like to construct more now. “It created an actual sense of urgency,” said Mike Laufer, co-founder and chief executive of Kairos Power, which this week signed a cope with Google to deploy six or seven small reactors by 2035.
The industry can also be benefiting from billions of dollars in funding from the U.S. government, which fears that Russia and China – which have deployed a handful of small reactors – could grow to be unassailable frontrunners within the nuclear sector. Washington can also be aware of the necessity to ensure a stable energy system to keep up its lead in AI technologies without causing an increase in emissions.
“The only obstacle stopping the United States from remaining a frontrunner in artificial intelligence is its power. It's not land, it's not chips, it's power. And that’s the primary goal,” said Clay Sell, CEO of X-Energy.
But critics warn that the euphoria surrounding nuclear power, and small reactors specifically, this week is masking significant risks in deploying a brand new generation of technology that has historically been vulnerable to delays and value overruns.
Edwin Lyman, director of nuclear energy security on the Union of Concerned Scientists, said the X-Energy and Kairos SMRs were “untested designs” and would likely take for much longer to deploy than their goal dates in 2030 and beyond.
“The road to secure and reliable industrial operation of an experimental nuclear technology will inevitably be rocky and it’s now virtually not possible to estimate what the ultimate cost of electricity shall be,” he said.
Strict regulatory standards and challenges remain hurdles, say developers of competing energy sources.
“The euphoria is a bit exaggerated,” said Andres Gluski, chief executive of AES, the most important renewable energy developer, which has signed 5.8 GW of power purchase agreements with Google, Microsoft and Amazon.
According to data from Lawrence Berkeley National Laboratory, solar, wind and battery storage account for 95 percent of the overall capability waiting to be connected to the grid, while nuclear power accounts for lower than 1 percent. According to Wood Mackenzie, no small reactor projects have yet begun construction within the U.S. and greater than 80 percent of announced capability has yet to enter the event pipeline.
But small reactor developers are confident that support from the tech giants is the game-changer they need.
“The tech community values ​​not only zero-carbon advantages, but additionally availability and reliability,” said Clayton Scott, chief industrial officer at NuScale. “The momentum is there.”
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