In today’s issue:
- Nuclear’s holdouts are about to convert
- When nuclear power can’t be bought for any price
- SMRs are the only solution left for AI data centres
No doubt you’ve heard about nuclear power’s extraordinary comeback. Perhaps you’re even positioned to potentially profit yourself.
Even my rabidly anti-nuclear kin in Germany and Australia may soon change their mind about nuclear power. Polls for the upcoming elections there suggest government policy is about to change radically in both.
Ten years ago, I could never have imagined it. Today, it feels inevitable.
Several German nuclear plants could come back online surprisingly quickly. (Despite some dodgy engineering reports that said they couldn’t in 2022, when Germany needed them during its energy crisis.)
Uranium investors can’t wait. Not that uranium is necessarily the best way to play the nuclear boom, by the way.
Australia may lift its moratorium on commercial nuclear power, creating local demand for its vast uranium reserves. Uranium investors aren’t waiting for the news – they’re buying the rumour. Well, the political polling, which shows the newly pro-nuclear centre-right ahead.
Recent government hearings in Australia on nuclear power humiliated the experts the left-wing Labor Party dragged in. No matter what they said about how terrible nuclear is, the entire world is pivoting towards it.
Except the parts that have it already. They’re busy reversing exits or expanding their expansion plans.
Even the private sector is in on the nuclear power action these days. Companies are planning on powering their own industrial might with their own in-house nuclear power. Small modular reactors (SMRs) have made it possible. Stable, green, cheap and reliable power is now a bite-size solution.
But this energy transition, if I might call it that, isn’t going off without a hitch. Last week, the US’ Federal Energy Regulatory Commission (FERC) threw a wrench in the reactor.
The media covered the story as though it was a stake in the heart of nuclear power. Or at least an objection to the marriage between nuclear power and AI data centres that need stable electricity.
And that’s what it looks like… at first.
When nuclear power can’t be bought for any price
The FERC rejected an application from Amazon to buy just under half a gigawatt of power from a nearby nuclear power station.
Why? As The Hill newspaper put it, “the regional grid operator, PJM Interconnection, failed to prove that the changes to the transmission agreement with Susquehanna power plant were necessary.”
In other words, the politicians on the panel don’t understand why data centre operators like Amazon want “behind the meter” power. That is, first dibs on the power produced at fixed prices. I mean, why can’t Amazon just get its power from the grid like the rest of us?
Can you think of any reason why Amazon might not want to rely on the grid you and I use?
Funnily enough, the feeling is mutual. It’s not just Amazon’s data centre that needs the nuclear power. The grid needs it to function just as much as the data centres do. So Amazon can’t have a senior claim, as they say in the markets. That’d put Amazon before the rest of us.
One politician who voted against the deal put it like this: “Co-location arrangements of the type presented here present an array of complicated, nuanced and multifaceted issues, which collectively could have huge ramifications for both grid reliability and consumer costs.”
So the grid is so desperate for baseload power it can’t afford to lose half a gigawatt to Amazon…?
My point is, the evidence that power grids are struggling continues to grow, rapidly. Not “proof” on the blogosphere, campaign trail or in YouTube videos. Now we’re talking regulatory decisions and business deals. The rubber is meeting the road. And the power isn’t there.
The likes of Amazon and other AI data centre companies now know they can’t secure a chunk of nuclear power for themselves. Not from large-scale power plants that keep the grid functioning during a dunkelflaute, anyway.
They tried to buy nuclear power directly from established plants. But this would undermine the grid too much. No politician will allow an Amazon data centre to keep the lights on while the workers and households sit in the dark. And so the application was rejected by FERC.
It was worth a try, I suppose.
But do you think the likes of Amazon will give up on AI and go home? Or do you think they’ll push for another solution?
What other solution is out there?
Again, there’s no need to look at the blogosphere or YouTube videos. The answer is that tech companies are already buying up SMRs to power their data centres.
The only thing better than a “behind the meter” link to a nuclear power station is having your own nuclear power station. Then the politicians can do what they like with their grid. AI can continue its pursuit of world domination on its own power.
Indeed, the FERC decision has proven that politicians are willing to rob AI data centres of their power if they can. Better get off the grid…
When the lights go out on the grid for the lack of baseload power, AI data centres will still be running. And then the public will turn on their politicians for fooling them into renewables.
If AI data centres foresaw that the grid won’t cut it, why did nobody on the grid foresee it?
It’s going to be one hell of a reckoning.
In the meantime, we can expect SMR stocks to go bananas as every tech company that had plans to rely on the local nuclear power station wakes up and adds SMRs to their industrial park instead.
Then the industrial companies that are able to electrify will join them in buying SMRs. They don’t want to be reliant on a failing grid that doesn’t prioritise them either.
And then small communities that are aware of the risk of the grid failing will look into SMRs.
Soon, we’ll have an energy revolution on our hands, let alone a transition.
Only those who continue to deny the green energy transition is failing will be left in the cold.
Until next time,
Nick Hubble
Editor, Fortune & Freedom
