Nuclear Power is Back—and Bigger Than Ever!
Once a symbol of fear, nuclear energy is now the solution to our climate crisis. Big names like Microsoft, Google, Amazon, and Meta are diving into the world of small modular reactors (SMRs) and nuclear-powered data centers.
What does this mean for the future of clean energy—and the uranium market?
Read the full article (available below) to discover how the nuclear industry is making a major comeback and why it’s about to change everything.
The article below is an excerpt from our Q3 2024 commentary.
It is no small irony that Three Mile Island, once a byword for the peril of nuclear energy, now stands poised to symbolize its renaissance. As The New York Times reported on November 11th, 2024, nuclear power plants, once the target of fierce opposition, are now coveted for their ability to produce massive amounts of electricity without the emissions that contribute to climate change. A transformation in perception is underway, and with it comes a surge of activity in the nuclear industry—one that bodes well for uranium’s future.
The virtues of nuclear power, long overshadowed by fear and controversy, are finally being recognized across the spectrum—from investors and electricity consumers to government officials and the global environmental community. These virtues, which we’ve outlined in detail, are so compelling that a worldwide nuclear boom is underway. The uranium market is positioned for a period of unprecedented excitement.
The signs are everywhere. Microsoft recently announced a groundbreaking partnership with Constellation Energy to reopen the Three Mile Island Unit 1 reactor which has been shuttered since 2019. The plant’s troubled history, particularly the infamous 1979 accident at its second reactor, makes this announcement extraordinary. Microsoft has agreed to purchase all the electricity generated by the plant at a rumored premium exceeding 100% above wholesale prices—a move that underscores the strategic value of nuclear power in today’s energy landscape.
Hot on the heels of this development came another seismic event. On September 30th, Holtec International secured a $1.5 billion loan guarantee from the U.S. Department of Energy to reopen the 800-megawatt Palisades Nuclear Plant in Michigan which had ceased operations in 2022. But Holtec’s ambitions don’t stop there. The company plans to install two small modular reactors (SMRs) on the site, adding 600 megawatts of new capacity while leveraging existing infrastructure. This dual strategy of reviving old plants and pioneering new technologies exemplifies the forward momentum of the nuclear industry.
Meanwhile, Google has made its own bold move, becoming the first company to sign an agreement with Kairos Power, a developer of molten salt-based SMRs. The deal paves the way for up to 500 megawatts of nuclear-generated electricity to power Google’s data centers. Kairos’s press release captured the significance of this partnership: “Having an agreement for multiple deployments is important to accelerate the commercialization of advanced nuclear energy by demonstrating the technical and market viability of a solution critical to decarbonization power grids while delivering much-needed energy generation and capacity.” In other words, Google is not merely buying power; it is helping to usher in a new era of nuclear energy.
Even Amazon has entered the fray, albeit with complications. In March, the company struck a deal to buy power for its nearby data center campus directly from Talen Energy’s Susquehanna Steam Electric Station, one of the largest nuclear plants in the U.S. This arrangement, which would have allowed Amazon to bypass the grid, was blocked by the Federal Energy Regulatory Commission (FERC) on November 4th. In reality, FERC’s rejection, ostensibly over grid reliability concerns, was a move to protect local grid operators and consumers from losing access to affordable power.
In its agreement with Talen, Amazon was attempting to buy power directly from the plant itself, not the grid system. In the parlance of the power-generating business, Amazon was attempting to get “behind the meter,” effectively stepping in front of consumers who had to buy their metered electricity off the grid. The FERC rejected the proposal, stating it may harm national security and grid reliability. However, the FERC’s rejection of the Amazon deal centered on its negative impact on local grid operators and their residential customers--who now would be power short and forced to purchase more expensive power from other electricity providers.
While the decision might seem bearish for nuclear at first glance, it is anything but.
As Cameco noted on its recent earnings call, FERC’s stance effectively forces data centers to either reopen old plants or build new ones---a win for aggregate uranium demand either way.
Finally, Meta Platforms has made its nuclear ambitions known, albeit indirectly. The discovery of a rare bee species on the proposed site delayed plans for a new data center which was to be powered by electricity generated from a nearby nuclear power plant. Still, the Financial Times revealed that CEO Mark Zuckerberg remains committed to nuclear power to solve Meta’s energy needs. Frustrated by the limited nuclear options in the U.S. compared to China’s aggressive adoption of the technology, Meta is reportedly exploring various deals for carbon-free energy, with SMRs high on the list.
These announcements underscore a simple but powerful truth: long-maligned and underutilized nuclear power is the only viable solution for the energy-intensive demands of the modern world. Over the past several years, we’ve had to increase our uranium demand estimates by nearly 40 million pounds as plant closures have been deferred and new-build plans have accelerated. With the introduction of SMRs, offering even greater efficiency and safety, the nuclear industry is poised to take another transformative leap.
The clearest indication that nuclear power is entering a new golden age is the enthusiasm of data center operators who represent the cutting edge of electricity consumption. These companies understand that nuclear energy addresses, not just availability and cost concerns but also the pressing challenges of CO2 emissions and climate change.
For investors, the uranium story has never been more compelling. The developments we witness are not merely bullish—they are the harbingers of a seismic shift. Like the nuclear industry itself, the uranium market is on the cusp of a remarkable transformation.
Curious to learn more? Read more in our Q3 2024 research newsletter, available for download below.
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