Artificial Intelligence is Big Tech’s newest toy. However, AI also requires massive amounts of energy to operate, which puts the industry’s climate commitments at risk. The sprawling data centers that Microsoft and other digital giants need are beginning to strain the nation’s existing power supplies. Meta Platforms recently reported last year’s emissions were roughly 70-percent above 2019 levels. Microsoft’s emissions jumped 40-percent in the three-year period through June 2023, while Google’s surged nearly 50-percent in the four years through December.
These energy needs have rapidly changed the economics of both the power and computing industries. Tech companies are already the biggest purchasers of wind and solar power, but those sources are not enough to meet the data centers’ voracious energy appetite. A search on a generative AI platform such as ChatGPT uses at least 10 times the energy as a standard search on Google.
As a result, tech companies are now scouring the nation for power that is both reliable and helps meet their pledge to fuel AI development with zero-emissions electricity. As this blog previously reported, Google is teaming up with a utility to buy power generated from heat beneath the earth’s surface, and some traditional fossil-fuel companies are hoping a breakthrough in geothermal energy technology will solve even more power problems. Another early-stage technology possibility that could get industry backing: batteries that store clean power for days instead of hours.
But tech’s biggest bet, so far, is on a nuclear power revival. Google, Amazon, and Microsoft are all developing arrangements that could provide power from smaller nuclear reactors (sticker shock from the $30-billion-plus cost of two large reactors at Plant Vogtle in Georgia as well as the scrapping of Scana Corp.’s half-built nuclear-power plant in South Carolina have put most nuclear-power proponents in a smaller-is-better mindset).
Microsoft just signed a deal to, once the Three Mile Island nuclear power plant comes back online in 2028, buy 100-percent of the power produced by the now-dormant facility for the next 20 years. The four-year restart plan would cost Constellation Energy, the plant’s owner, about $1.6 billion, and relies heavily on federal subsidies from the 2022 Inflation Reduction Act in the form of tax breaks earmarked for nuclear power, which provide a credit for every megawatt hour of nuclear energy produced.
Amazon has already reached a deal with Talen Energy to purchase power produced by the financially troubled Susquehanna nuclear plant for Amazon’s planned data-center campus in Pennsylvania.
However, both agreements face regulatory threats. A commercial nuclear power plant’s output has never been allocated to just a single customer. The federal Nuclear Regulatory Commission, which has never previously authorized the reopening of a plant, needs to sign off on these projects. Critics are skeptical about using public subsidies—without which these initiatives cannot move forward—for private commercial projects.
Regional utilities worry their ratepayers will be saddled with the bill for any updates to the power grid these projects require, and clean-energy advocates decry any shift from tech companies driving a transition to clean energy to simply claiming for themselves what is already available.
Several tech companies are investigating the potential of locating their facilities near small modular nuclear reactors that could feed them power directly. Such technology is in its infancy and has not yet been approved by regulators, but that isn’t stopping Terra Power, a company chaired by Microsoft co-founder Bill Gates, from doubling down on it. The firm began construction this year at what it plans to be a small reactor site in Wyoming.
With expansion, of course, comes opportunity. Federal tax credits now available to nuclear power producers have made these projects more financially feasible, as the owners of existing plants can now, for the first time, receive a production tax credit similar to what wind projects receive. Investment tax credits are also available for new projects. Anyone operating in the energy space should ensure they have examined, in conjunction with their attorneys, any opportunities presented to them by Big Tech’s nuclear pivot.
