Amazon is making a significant foray into the realm of nuclear power as part of its expansive data-center growth strategy, with a whopping investment exceeding $52 billion spread across three states in the U.S. The e-commerce behemoth has sealed three pivotal deals to delve into the exploration and development of small modular reactors (SMRs), a cutting-edge nuclear technology promising enhanced efficiency, compactness, and cleaner power generation. AWS CEO Matt Garman highlighted the unique potential of SMRs in offering scalable and dependable power solutions to cater to the escalating energy demands of data centers. The market responded fervently to Amazon’s move, with shares of nuclear companies such as Nano Nuclear Energy, Nuscale Power, and Oklo witnessing a notable surge in premarket trading.
SMRs represent a groundbreaking advancement in nuclear reactor design, with a size that is less than 10% of traditional nuclear plants while still capable of generating up to approximately one-third of the power output of conventional reactors. This compactness facilitates easier deployment and integration into the energy grid. Developers are aiming to have these innovative reactors operational and generating electricity by the early 2030s, subject to approval from the Nuclear Regulatory Commission (NRC) for construction and operation, as well as validation of the technology’s feasibility. Amazon’s latest collaboration with Dominion Energy, a utility company with a market capitalization of $48 billion, is focused on exploring the deployment of SMRs in Virginia, near Dominion’s North Anna power station in Louisa County.
Virginia stands as a prominent hub for data centers in the U.S., hosting nearly half of the country’s data facilities, with a significant concentration in Northern Virginia, particularly in the Data Center Alley situated in Loudoun County. This region witnesses approximately 70% of the global internet traffic passing through it daily and has seen a substantial doubling in power demand over the past five years, with a projected fourfold increase over the next 15 years. The planned SMR in Virginia could potentially contribute at least 300 megawatts of power, capable of supporting multiple data centers in the area. Amazon has pledged a substantial investment of $35 billion by 2040 to establish numerous data center campuses across Virginia, as announced by Governor Youngkin in the previous year.
The intersection of nuclear power and cloud computing is a key focus for Dominion, X-Energy, and Amazon, with Garman emphasizing that Amazon’s pursuit of nuclear energy aligns with its broader objective of achieving net-zero emissions by 2040. Garman emphasized the necessity for gigawatts of power in the forthcoming years, citing the insufficiency of wind and solar projects alone to meet the escalating energy demands. He underscored nuclear power as a crucial opportunity to bridge this gap. The specific targets for nuclear’s contribution to AWS’s energy requirements remain undisclosed, but Garman expressed Amazon’s aspiration for SMRs to serve as a substantial source of power generation by 2040. In addition to the Dominion collaboration, Amazon has also announced agreements to develop SMRs in Washington state with Energy Northwest and to support X-energy, an advanced nuclear startup.
X-energy is currently spearheading its first SMR project in Seadrift, Texas, in partnership with Dow Chemical, with Amazon extending significant financial backing to X-energy through its Climate Pledge Fund, anchoring a $500 million investment. This commitment aims to bring online 5 gigawatts of SMR-based energy across the U.S. by 2039. The appeal of SMRs lies in their capacity to power entire mid-sized cities, making them an ideal fit for meeting the energy-intensive demands of data centers, particularly those driven by artificial intelligence (AI). Unlike intermittent renewable sources like wind or solar, SMRs offer stable and continuous energy supplies, with capacities of up to 300 megawatts that can be tailored to meet local energy needs.
One of the key advantages of SMRs is their carbon-free nature, aligning with Amazon’s sustainability goals of reducing its environmental impact. Nuclear energy stands out for its emission-free operation, providing a reliable solution for tech companies seeking to diminish their carbon footprints. AWS, alongside its industry counterparts, is resolute in its commitment to reducing emissions, despite facing challenges. In 2023, Amazon’s carbon footprint hovered just below 69 million metric tons of CO2, slightly lower than its peak in 2021 but still substantial.
Beyond its collaboration with Dominion in Virginia, Amazon is eyeing other regions for SMR projects. In Washington, the company is working with Energy Northwest to establish an SMR near the Columbia Generating Station in Richland, aiming to deliver up to 960 megawatts of power, with Amazon securing rights to purchase electricity from the initial 320 megawatts generated. This flexibility in scaling energy projects across diverse regions underscores the appeal of SMRs, enabling Amazon to replicate its nuclear model wherever high energy demand exists. AWS recently acquired a 960-megawatt data center campus in Pennsylvania from Talen Energy, inclusive of access to fixed-price nuclear power from Talen’s Susquehanna nuclear plant.
Amazon’s venture into nuclear power reflects a broader trend within the industry, with Google announcing its own SMR project in collaboration with Kairos Power, and Constellation Energy planning to revive operations at the iconic Three Mile Island to power Microsoft’s data centers. The optimism surrounding SMRs is palpable, with industry leaders acknowledging the surge of capital and innovation propelling this technology forward. X-energy CEO Clay Sell perceives a significant opportunity in the growing demand for nuclear energy, particularly in light of AI’s energy requirements reshaping companies’ energy strategies in the U.S.
The Biden administration’s substantial investments in clean energy initiatives are propelling the momentum towards cleaner and more reliable energy solutions. U.S. Energy Secretary Jennifer Granholm disclosed an additional $900 million in funding available for projects geared towards deploying SMRs, bolstering the broader drive to accelerate clean energy solutions nationwide. For Amazon, SMRs represent a promising avenue forward in meeting the energy demands of data centers and advancing its sustainability objectives. The journey towards widespread deployment of advanced nuclear technology signifies a pivotal shift in the energy landscape, with companies like Amazon leading the charge towards a more sustainable future.
