This article is adapted from an article by Michael Robinson. He has spent more than four decades as an investigative journalist uncovering the story behind massive tech trends.
A massive energy crisis is here … and it’s all because of artificial intelligence. It is one of the reasons why solar and wind (intermittent renewables) are not adequate for maintaining supply. Nuclear is considered the best option to stabilise the energy mix.
On average, just one new AI data center currently requires the same amount of electricity as 750,000 homes. That’s more than the population of cities like Seattle, Detroit, and Denver.
Nearly 3,000 more of them are on the way. No wonder Tirias Research forecasts that, by 2028, data center power consumption will be 212 times what it was in 2023.
This boom in AI data centers will push America’s power grid to the brink. According to the New York Times, the world is “poised to add the equivalent of Japan’s annual electricity demand to grids each year” over the next decade.
It could bring AI screeching to a halt … Let alone affect regular people as utility bills skyrocket — even as they face planned blackouts to conserve energy … and prolonged outages because of creaky infrastructure.
Fortunately, Meta announced yesterday a request for proposals from nuclear power developers who would help the company add 1 to 4 gigawatts of electricity generating capacity in the U.S. According to Axios, Meta is willing to share costs early in the cycle and will commit to buying power once the reactors are up and running.
The hitch? Applicants have to move fast. Initial proposals are due February 7, 2025, and Meta wants the power plants to begin operation in the early 2030s.
Microsoft has signed a deal with one of the most infamous nuclear power facilities in the US as it looks for more ways to ensure the demand for AI computing is met.
The legacy of the Three Mile Island (TMI) nuclear plant has long been shaped by the 1979 Unit 2 meltdown, which had a profound effect on public perceptions of nuclear energy. What a lot of people don’t know is that Unit 1 was not only unaffected, but continued to operate safely and reliably for decades.
Now, in a major new step, Constellation has signed its largest power purchase agreement with Microsoft, leading to the planned restoration and restart of TMI Unit 1 under the name Crane Clean Energy Center (CCEC). The project is expected to bring 835 megawatts of carbon-free power to the grid, create 3,400 jobs, and contribute over $3 billion in taxes.
Considering this move in the USA it will be interesting to learn how Microsoft plans to power their new data centers in Australia.
Microsoft will invest A$5 billion ($3.2 billion) in Australia to expand its cloud computing and AI infrastructure over the next two years, in what the US company described as its largest investment in the country in four decades. Announced as part of Prime Minister Anthony Albanese’s visit to the US this week, the investment will help Microsoft grow its data centers across Canberra, Sydney, and Melbourne by 45% – from 20 sites up to 29.
The following video shows that power constraints are the major problem facing Data Centre growth.
Trump started bringing production back to the USA during his first term. It has only accelerated in large part due to AI and Robotics and Trump’s efforts to make the USA energy independent by opening up fracking. Biden’s term has not helped but Trump will quickly resolve the energy supply problem.
The demands for new energy production are driven primarily by two massive trends that will certainly accelerate in the next four years.
There is a need for new AI factories – massive data centers – some of which will be on a gigawatt scale. It’s hard to imagine a data center facility that requires that much power, but that’s what is required to build artificial general intelligence (AGI), and it will be required to run thousands of AI applications. The capital expenditures for AI for Amazon, Microsoft, Alphabet, Oracle, Meta, and Apple for 2025 will be around $200 billion. That’s just six companies in one year.
This is a multitrillion-dollar trend that will unfold over the next decade. It’s unstoppable. And it needs gigawatts of electricity to fuel these technological advancements.
The second major trend is something I’ve referred to as The Great Recalibration. It’s a massive reversal of the multi-decade trend to move manufacturing offshore, primarily to Asia.
Economic policies that began in 2017 were a turning point for bringing manufacturing back onshore. The tide is coming back in and manufacturing in-country has become deeply popular again. And for good reason:
It creates jobs and opportunity
It improves supply chain security
It reduces overall CO₂ emissions by manufacturing close to end markets (i.e. less transportation and logistics are required)
These economic policies take a few years to kick in, and they tend to span administrations. It’s easy to see the impact in the chart below. Total manufacturing construction spending has more than tripled since January 2020.
Source: BlackRock
By May of this year, manufacturing construction spending has increased to around $234 billion annually. This isn’t a trend that will slow down. And the supply chain problems caused by the pandemic policies only accelerated this recalibration.
This recalibration wouldn’t be possible, however, without today’s advanced technology.
Robotics, artificial intelligence, and process automation are driving manufacturing costs down to levels that are near what can be produced in China, without the supply chain or intellectual property risks.
And of course, all of these new manufacturing plants, whether they be for cars, semiconductors, or bicycles, will require gigawatts of electricity to run. Preferably, carbon emission-free energy.
And that’s why the politics have shifted. Technology can and will save the day. That’s why energy policy and regulations are so critically important. Investment follows when there are reasonable regulations that provide a clear path toward commercialization in a short period. This has long been the issue with nuclear power regulations.
A New Energy Framework
Earlier this year, U.S. Department of Energy (DOE) gave Holtec International approval for a $1.52 billion loan guarantee to bring 800 megawatts of nuclear power back online by restarting the Palisades nuclear power plant in southwest Michigan. At the same time, the Diablo Canyon nuclear power plant in California received $1.1 billion from the program to enable its two nuclear reactors to stay in operation.
Based on the DOE’s estimates of needing an additional 200 gigawatts of new nuclear power in the next 25 years, the U.S. government just announced yesterday a new nuclear energy framework to bring online “200 GW of net new nuclear energy capacity by 2050.”
Bring online 35 gigawatts (GW) of new nuclear capacity by 2035
Ramp up to bringing on line 15 GW of new nuclear capacity by 2040
To put things in perspective, 1 GW of electricity is about half the output of the Hoover Dam. It’s enough to power roughly 750,000-850,000 homes. This new framework has a target of 200 GW, enough to power up to 170,000,000 homes with carbon emission-free electricity. But the increase in nuclear power production isn’t for homes, it’s for the new Data Centres needed for the AI revolution and manufacturing and infrastructure construction
With Vivek Ramaswamy and Elon Musk now officially assigned to head up the Department of Government Efficiency (DOGE), we can expect rapid progress on this front. Both are intelligent, evidence-based, and common-sense thinkers now charged with the mandate to reduce government waste, “slash excess regulations,” and bring an entrepreneurial approach to government.
Having built the most successful clean energy company in history, I know this will be a major focus for Musk. He deeply understands that fueling Tesla electric vehicles with electricity produced from coal, natural gas, and oil makes no sense at all.
With nuclear power, the dream of carbon emission-free ground transportation is possible.
Better yet, DOGE has already been given a deadline for its mission. The team is to conclude its work no later than July 4, 2026, the 250th anniversary of The Declaration of Independence.
My prediction – DOGE is going to hit the ground running in January and aggressively get things done. We’re in for some remarkable developments. And cheap, limitless, clean energy is the path to abundance.
The Australian Labour Party needs to realise that its current renewable energy policy will not be adequate and cost-effective for industry to be competitive. We need to bring more natural gas online and upgrade and maintain our coal-fired power stations until we can introduce the best nuclear options for each State. High-efficiency low-emissions (HELE) coal-fired power stations are proven to reduce both emissions and fuel costs by maximising the amount of power from the steam produced.
UK Energy Secretary Ed Miliband and US Deputy Secretary of Energy David Turk agreed to a plan to “help pool together billions of pounds worth of nuclear research and development – including the world’s leading academic institutions and nuclear innovators”.
The decision is an extension of the pro-nuclear agreement signed by 31 nations last year at COP28 to triple nuclear energy capacity globally by 2050 and aims to have new technology available by 2030.
This may be enough to give Dutton and the Liberal Party a chance to win the next election.
The data centers that power AI technologies require such prodigious – and reliable – volumes of electricity, that tech giants like Amazon.com Inc. (AMZN) and Microsoft Corp. (MSFT) “rediscovered” nuclear power as an ideal energy source.
Microsoft and Constellation Energy, the utility that owns Three Mile Island, announced a new deal on September 20th that will lead to the restart of Unit 1 at the Three Mile Island Nuclear Generating Station. This will be the first time a nuclear reactor in the United States has been brought back online after being shut down.
The deal is for 20 years and is a power purchase agreement in which Microsoft will buy the power generated by Unit 1 for an estimated $110-$115 per megawatt hour in order to reliably power its Artificial Intelligence (AI) data center demand while meeting the companies clean energy goals. Unit one will reopen as the “Crane Clean Energy Center” by 2028 so long as the Nuclear Regulatory Commission approves the plan.
Amazon Web Services is paying as much as $650 million for a data center campus adjacent to a nuclear power plant in Pennsylvania. The cloud provider reportedly plans to build several data centers there, according to The Information.
The recent Amazon and Microsoft nuclear deals are not outliers. Earlier this month, Oracle Corp. (ORCL) Chairman and Co-founder Larry Ellison announced that his company had obtained “building permits for three nuclear reactors. These are small modular nuclear reactors to power the data center.
Along with this surprising announcement, Ellison also mentioned that some of the newest data centers under construction will require ten times more power than the typical facilities in operation today. Oracle, he said, is building an 800-megawatt data center that will have “acres of Nvidia GPU clusters” that will be used to train one of the world’s largest AI models.
For perspective, 800 MW is nearly identical to the entire power supply that Microsoft expects the Three Mile Island plant to produce once it reopens. In other words, one modern data center will need the entire output of one nuclear reactor.
In many important respects, nuclear energy has no equal, especially when it comes to powering data centers. Electricity that is intermittent, or susceptible to interruption, is electricity that could cause a big, expensive mess for data centers. Nukes prevent that problem. They can run continuously for long periods of time without needing maintenance or refueling.
Importantly, nukes also require a relatively small footprint, compared to renewable energy sources. Theoretically, a square plot of land, 22 miles long on each side, could accommodate enough nuclear reactors to power the entire United States.
Looks like Dutton may be onto a winner by bringing Nuclear Energy into our Power Mix. Because of the need for lots of land, batteries, digitalisation, and new infrastructure (grid upgrade and expansion) with wind, and solar the renewables option is more expensive and less reliable than Nuclear.
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