Shares of nuclear energy companies reached new heights this week after Amazon and Google made significant power supply agreements, accelerating plans to introduce small modular reactors (SMRs) in the United States.
The stock prices of two US-listed SMR developers, Oklo Inc and NuScale Power, saw remarkable increases of 99% and 37%, respectively, following financing announcements from their competitors, X-energy and Kairos Power. Other companies such as Cameco, Constellation Energy, and BWX Technologies also experienced record-high trading over the week.
These new deals could lead to the deployment of several advanced reactors designed to provide low-carbon energy to meet the growing power needs of Amazon and Google’s artificial intelligence data centers. This surge in demand for electricity has heightened investor interest, suggesting a resurgence in nuclear energy following a decline that began after the Fukushima disaster in Japan in 2011.
Interestingly, as data centers proliferate, America’s energy consumption is skyrocketing, raising challenges in the quest to decrease reliance on fossil fuels. Notably, shares in Constellation, which manages the largest fleet of conventional reactors in the US, more than doubled since the beginning of the year.
Recently, Constellation signed a 20-year power supply contract with Microsoft, which could pave the way for reopening the Three Mile Island nuclear plant in Pennsylvania, famously known for a serious nuclear accident in US history.
Uranium producer Cameco has seen its shares jump by 38% this year, while BWX Technologies, a supplier of nuclear components, reported a 65% increase in their stock value.
Seth Grae, CEO of Lightbridge Corporation, stated, “Reactor companies have insisted for some time that they would be essential to meet the growing demand for AI power, and this investment is the proof that the tech industry acknowledges the need for reliable energy sources that renewables and batteries alone cannot provide.”
For a long time, investors have hesitated to support the small reactor rollout, as these smaller designs are promoted as safer and more efficient compared to traditional reactors. Concerns lingered about the industry’s historical challenges with project timelines and budgets, coupled with high interest rates and the lack of potential customers ready to invest in these ventures.
The recent commitments from Amazon and Google to small reactors display their urgent need for sustainable and dependable electricity sources to fuel their expanding data facilities. Over the first half of 2024, nearly 24 gigawatts of new data center announcements were made—more than triple the number from the same period last year, highlighting the accelerated pace of growth in this sector.
Mike Laufer, co-founder and CEO of Kairos Power, emphasized the urgency for new energy solutions, stating, “It’s not just about replacing existing fossil generation; it’s about building more now. This urgency is palpable.”
Meanwhile, the industry also benefits from significant funding from the US government, concerned that countries like Russia and China are advancing in the nuclear arena. Ensuring a reliable energy framework is seen as vital for maintaining US leadership in artificial intelligence without increasing carbon emissions.
Despite the positive momentum surrounding nuclear energy, some experts warn that optimism may be premature. Edwin Lyman, a nuclear safety director at the Union of Concerned Scientists, voiced concerns over the deployment of untested small modular reactors, emphasizing that their timelines for operational readiness are likely overly optimistic.
Regulatory standards and challenges remain significant obstacles, noted those promoting alternative energy solutions. Andres Gluski, CEO of AES, observed that while the current enthusiasm is considerable, it’s essential not to neglect the reality that solar, wind, and battery storage represent 95% of the capacity waiting for grid connection, whereas nuclear contributes less than 1%.
Nevertheless, leaders from the small reactor community remain hopeful, asserting that the backing of major tech companies could be the turning point for the industry. “The tech world values not only the carbon-free aspect but also the reliability and availability of energy,” said Clayton Scott, chief commercial officer at NuScale. “The momentum is definitely shifting.”