Desperate for power, modern AI firms lean on a geriatric American nuclear fleet

MIDDLETOWN, Pa. — The control room at Three Mile Island doesn’t call to mind modern-day Silicon Valley.

The nuclear plant’s gadgetry has plastic levers and colored buttons chunky enough for a toddler’s play set, push-button landline phones and monochrome monitors. But vintage facilities like these are now coveted by tech companies that need immense amounts of power today to propel their dreams for tomorrow.

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The nation’s dwindling fleet of nuclear plants is being seized upon by tech firms such as Microsoft and Amazon as a foundation for their plans for an artificial intelligence-infused future. The aged but reliable survivors have emerged as one of the most viable ways to quickly feed tech firms’ growing thirst for electricity to power the giant data centers needed for AI projects.

Meta signed a 20-year agreement for the power flowing from a large legacy reactor in Illinois, Microsoft struck a deal to restart a reactor next to the one at Pennsylvania’s Three Mile Island plant that was shuttered in 1979 by a partial meltdown, and Amazon last month in the same state locked up power from a 42-year-old nuclear plant down the Susquehanna River.

Tech companies are scouring the nation for other geriatric nuclear plants to power their AI dreams, according to interviews with nuclear industry officials and company earnings calls. Their interest is focused on the roughly two dozen operating plants in unregulated markets, which are in many cases free to sell power to the highest bidder. They make up about half of the 54 plants still operating in the United States.

The tech firms say the deals give new life to plants at risk of going offline or that have already been shut down. Contracts that lock in rates for decades are attractive to plant operators, and the electricity flows without directly generating new carbon emissions.

But critics say Silicon Valley’s nuclear spree will make it more likely that consumers will face electricity rate hikes or shortages in coming years as the nation faces soaring demand for power — driven in part by new data centers.

By locking up aging nuclear plants instead of building new power generation, tech firms could leave communities to fall back on fossil fuels, extending the life of polluting coal and gas plants. A few years ago, nuclear energy struggled to compete with cheaper renewables and natural gas, but all power sources are now in greater demand. Contracts with tech firms can offer nuclear plant operators as much as double the market rate for electricity.

Jackson Morris, a director with the environmental advocacy group Natural Resources Defense Council, said tapping nuclear energy allows companies to keep pledges to use carbon-free power, but “doesn’t do anything to solve for the impact they’re having on consumers.”

“They’re insulating themselves from their own impact,” he said.

Amazon, Google, Meta and Microsoft declined to answer questions about which additional nuclear plants they may be seeking to buy power from, as well as the potential impacts of such purchases on other ratepayers and the environment. Amazon founder Jeff Bezos owns The Washington Post.

All of the companies say they mitigate the impact of their energy use on other customers, by working with utilities to shield customers from funding infrastructure that serves only data centers and investing in bringing new clean technologies to the power grid.

Tech firms say their data centers will eventually be powered by a new generation of cheaper but more sophisticated nuclear reactors, to be designed with help from AI. But the technology has been stymied by engineering issues, supply chain challenges and regulatory hurdles. Google and Microsoft are also investing in fusion energy, which is even less proven.

“It turns out it is hard to go from all of that fancy new technology on a spreadsheet to an actual piece of infrastructure that isn’t run with analogue controls,” said Ted Nordhaus, co-founder of the Breakthrough Institute, a California-based energy think tank. “Right now there is not much else to do other than try to squeeze every electron you can out of the existing nuclear fleet.”

Chain reaction

Energy companies that own nuclear plants are thrilled by the tech industry’s recent interest, calling it a springboard for nuclear power’s resurgence.

New Jersey power company PSEG told investors in February that it is in talks with tech firms about selling large amounts of power directly from its nuclear reactors on what is known as the Artificial Island complex in Delaware Bay.

Company CEO Ralph LaRossa said in April that requests for new power from the utility by data centers has exploded over the past year, jumping 16-fold to 6.4 gigawatts, an amount of electricity that could power several million homes.

In Texas, energy company Vistra says it is in talks with tech firms interested in buying energy from the Comanche Peak nuclear plant, near Fort Worth, and possibly others it owns in Ohio and Pennsylvania.

“I think we will see more large deals,” said Dan Eggers, executive vice president at Constellation Energy, which owns or partially owns 13 nuclear energy complexes across the country.

Constellation has already rezoned land next to the Byron Clean Energy Center, a nuclear plant in Illinois, so tech companies can build data centers there. It is seeking similar changes at the campus of the Calvert Cliffs nuclear plant in Maryland on Chesapeake Bay. The company says it is also contemplating new deals with tech companies for long-term nuclear power contracts in Pennsylvania and New York.

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Lawmakers and regulators in some communities are concerned data center nuclear deals could increase costs for other ratepayers and weaken the power grid. Some Maryland lawmakers want to ban Constellation from inviting data center construction alongside Calvert Cliffs, which produces nearly 40 percent of the state’s electricity. A report from the state’s Public Service Commission warns that siphoning energy from the plant away from the power grid for data centers could destabilize the system.

“In addition to being costly to replace a large nuclear plant, the quality of the generation … would be difficult to replace,” the report says. Unlike solar or wind facilities, nuclear power provides round-the-clock electricity when the plants are operating, in any weather.

In many cases, nuclear power that gets redirected to tech companies would be backfilled on the power grid with gas or coal generation.

Nuclear industry officials say the solution is not restricting deals, but building more plants. “It is short sighted to say we will just ignore all this demand over the next few years and tell these companies to get their power somewhere else, when this could set us up for a lot of growth in the industry,” said Benton Arnett, senior director of markets and policy at the Nuclear Energy Institute, an industry group.

But even nuclear executives working with tech firms acknowledge that pulling zero emissions nuclear energy away from other customers will have an impact on the climate and can be out of sync with ambitious commitments tech firms have made to reduce their carbon footprint.

“A growing list of people are realizing they can’t have everything they want,” said Robert Coward, principal officer at MPR Associates, one of the nuclear industry’s leading technical services firms.

Critical mass

The scramble by tech firms to secure more nuclear energy quickly has led Silicon Valley companies to some unexpected places.

They include a dormant construction site in South Carolina, where plans to build a Three Mile Island-size nuclear plant were abandoned in 2017, after the developer burned through $9 billion on a project that struggled with cost overruns and engineering setbacks. Local ratepayers were saddled with the bill.

Federal prosecutors in 2020 secured prison sentences for executives involved with the project for lying to investors and ratepayers about its viability.

Now, several big tech companies are among those that have expressed interest in bringing the V.C. Summer nuclear project back to life, according to testimony from officials at utility Santee Cooper, after it invited proposals for restarting the project. A utility spokesperson would not say if there are tech companies among the three or four proposals she said are finalists for a potential deal.

Tech firms are also eyeing a revival of Duane Arnold Energy Center in Iowa, a 1970s vintage nuclear plant majority-owned by NextEra that was mothballed in 2020 after a fierce storm damaged its cooling towers, according to company earnings calls. The repairs were initially deemed too costly, but data centers have shifted the economics of nuclear energy, and NextEra is mulling a reboot to serve the facilities.

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“If we continue to see the kind of prices Microsoft is willing to pay for nuclear power from Three Mile Island, these type of deals become a solid economic proposition,” said Carly Davenport, a utilities analyst at Goldman Sachs. She said estimates show the tech company is paying as much as twice the going rate on the open market, and locking in for a 20-year contract.

Duane Arnold is one of the last retired plants intact enough to restart. Many of the retired plants in the U.S. have already been dismantled. But tech companies are finding ways to squeeze more juice out of active reactors in the aging national fleet, pursuing reactor “uprates” from federal regulators that allow increased output.

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Nuclear power companies aim to increase the power output of the existing U.S. nuclear fleet by the equivalent of three large new reactors using that tactic.

As more deals involving aging reactors emerge, consumer advocates and environmental groups are growing concerned about the impact on everyday ratepayers and the planet.

Amazon reconfigured its deal in Pennsylvania after it was rejected by federal regulators that expressed concern about the effects on consumer electricity bills. The company had proposed routing power from the plant directly to nearby data centers, allowing it to avoid paying usage fees for the electric grid.

The online retailer last month announced a deal with plant owner Talen in which it agreed to pay grid fees, a contract that will effectively lock up a large chunk of existing power generation at a time the Mid-Atlantic power grid desperately needs more energy.

The deal is notable because it puts an existing nuclear plant on sound economic footing for another decade of emissions-free power generation, said former federal energy commissioner Allison Clements.

But Amazon is also removing supply from the grid just as demand from AI and other uses such as electric cars and air conditioners is spiking.

“There isn’t enough power on the grid,” Clements said, and the increased load forecast by analysts, utilities and grid operators cannot be met by existing power sources. “There’s not enough room on the system.”