Amazon.com has announced its latest initiative to bolster energy supply for its data centers by entering into three agreements focused on the development of small modular reactors (SMRs).
This move positions Amazon.com alongside other major tech companies exploring sustainable energy sources to meet the escalating electricity demand driven by advancements in artificial intelligence and cloud computing.
Amazon deals
Amazon will finance a feasibility study for an SMR project near a Northwest Energy site in Washington state, which will be developed in partnership with X-Energy. Though financial details were not disclosed, Amazon’s investment aims to pave the way for the construction of nuclear technologies that promise to generate energy for decades.
Amazon.com will secure the right to purchase electricity from four SMR modules. Energy Northwest, a consortium of state public utilities, will retain the option to expand this project with an additional eight modules, leading to a potential total capacity of 960 megawatts — enough to power over 770,000 U.S. homes. This additional capacity will be accessible to Amazon and various utilities to power both residential and commercial establishments.
How do the latest energy deals by Microsoft, Google, etc., compare?
The leading hyperscale cloud providers – Amazon, Microsoft, Google, and Oracle – have announced their intentions to invest in the development and deployment of nuclear energy.
Hyperscale data center operators aspire to operate sustainably and to lower their carbon emissions. Nuclear energy represents an opportunity to create new sources of carbon free energy to meet the increasing power demands of hyperscale data center operators, Gartner’s Distinguished VP Analyst Ed Anderson said.
Microsoft is working with Constellation Energy to reinstantiate nuclear power from the Three Mile Island nuclear power plant – a large, conventional reactor.
Amazon, Google, and Oracle have announced plans to invest in the development of small modular reactors (SMRs), a new technology that provides more flexibility in building and deploying nuclear energy.
Ed Anderson said the common thread is these providers’ need for more energy to power their data centers. They look to nuclear energy to not only provide new sources of energy, but also to support their carbon-free operations and sustainability goals.
What sets Amazon’s deal apart?
Amazon is directly investing in the development of nuclear energy using SMR technology. Amazon announced agreements with two energy providers, Energy Northwest and Dominion Energy, to support SMR projects that will provide nuclear energy in Washington State and Virginia. Amazon also announced an investment of $500 million with X-energy, a developer of SMR technologies that will be used specifically to support the Energy Northwest nuclear energy project, Ed Anderson said.
IEA outlook
International Energy Association (IEA) in its energy outlook today said over 11,000 data centres were registered worldwide in early 2024. IEA says growth of electricity demand for data centres is projected to be rapid.
Data centre electricity consumption was estimated in 2022 to be in the range of 240 to 340 TWh, around 1 percent to 1.3 percent of total electricity consumption (excluding data networks and crypto mining). Though AI currently accounts for a relatively small share of global data centre electricity consumption, it is emerging as a new driver of growth.
Matt Garman, CEO of Amazon Web Services, said: “Our agreements will encourage the construction of new nuclear technologies that will generate energy for decades to come.” SMRs are designed with components that can be pre-fabricated in factories, which may lower construction costs compared to traditional larger reactors built onsite. However, critics argue that achieving the necessary economies of scale may prove challenging.
The bipartisan support for nuclear power stems from its potential to provide clean energy with minimal greenhouse gas emissions while creating high-paying union jobs. Despite this backing, no operational SMRs exist in the U.S. yet. NuScale, the only U.S. company licensed by the Nuclear Regulatory Commission (NRC) to design SMRs, faced setbacks last year, leading to the cancellation of its first SMR project in Idaho.
The U.S. is still grappling with the challenge of managing long-lived radioactive nuclear waste, as there is no final repository established for its disposal. Scott Burnell, a spokesperson for the NRC, noted that no specific plans regarding the new SMRs have been submitted for regulatory review yet.
The surge in agreements among tech companies in the nuclear sector reflects the growing demand for energy in the wake of artificial intelligence’s rise. According to Goldman Sachs, power usage by U.S. data centers is projected to triple between 2023 and 2030, necessitating around 47 gigawatts of new generation capacity.
Amazon is leading a $500 million funding round to support X-Energy’s development of SMRs, with the goal of bringing over 5 gigawatts online in the U.S. by 2039 — the largest commercial deployment target for SMRs to date.
Furthermore, Amazon has signed an agreement with Dominion Energy to explore an SMR project near an existing power station in Virginia, targeting an output of approximately 300 megawatts to meet an expected 85 percent surge in regional demand over the next 15 years, Reuters news report said.
At an event in Virginia, U.S. Senator Mark Warner expressed optimism about these developments, suggesting they could “crack the code” for constructing U.S. SMRs. He noted international interest from parties wanting to purchase SMRs from U.S. companies, despite the lack of domestic construction.
Other deals
Alphabet’s Google signed an agreement with Kairos Power to deploy an SMR by 2030.
Microsoft and Constellation Energy recently entered into a power deal aimed at reviving a unit of the Three Mile Island plant in Pennsylvania, which was the site of the worst nuclear accident in U.S. history in 1979.
As the race for sustainable energy intensifies, Amazon’s investment in the nuclear power industry could be a significant step toward meeting its energy needs and contributing to a more resilient power grid.
Baburajan Kizhakedath
