Editor’s note: I’m about to tell you about one of our predictions at The Fleet Street Letter – and how it came true. But before we dive in, I want to let you know about one of our most urgent predictions right now. In just two days, Labour will be announcing the budget. But are you prepared for that this means for your wealth? Let us help you get prepared now, before it’s too late.
In today’s issue:
- AI goes for off-the-grid nuclear
- But why does AI need its own parallel power system?
- Who else wants enough electricity?
Just as we predicted in the March issue of The Fleet Street Letter, artificial intelligence (AI) companies are buying small modular nuclear reactors (SMRs).
Their data centres need vast amounts of reliable and clean power at a stable and predictable cost. And they’ve chosen SMRs to provide it.
My question is why. And where does it leave the rest of us?
But first, here are some recent examples of AI tech firms going for off-the-grid nuclear power…
Google has ordered up to seven SMRs from Kairos Power.
Oracle is planning to use three SMRs to power one of its data centres.
Equinix, a major data centre operator, already paid US$25 million to SMR company Oklo.
Standard Power, another data centre operator, has put in its SMR order too.
Amazon and Microsoft have contracted for power from existing larger nuclear plants.
It’s not just Big Tech, of course. The Finns are looking to use SMRs to supply heating. And Dow Chemicals for its operations.
At the end of September, the count for SMR orders stood at 200. SMR-related stocks are flying. And AI data centres triggered the surge in the way we foresaw.
But all this begs the very awkward question we also highlighted back in March: why aren’t Big Tech firms willing to hook up their AI to the electricity grid you and I use?
Why does AI need its own parallel power system?
Is AI planning to take over the world? If we can’t pull the plug, it’d stand a better chance…
But then why would other industrial firms and energy users go to the expense and hassle of providing or securing their own SMR power supply too? I don’t think the Finns have any ambitions to rule the planet…
What do SMR buyers know about the electricity grid and future availability of power to make them bother with their own private power solution?
It must be something extraordinary to suddenly require setting up their own sources of electricity supply, independent from the grid. The cost, the complication, the work… why bother?
Can you think of anything that might make all this necessary?
Google explained that nuclear provided “a clean, round-the-clock power source that can help us reliably meet electricity demands.”
Which implies what about the regular electricity supply?
Is it not going to be clean?
Is it not going to be round-the-clock?
Will it not meet our electricity demands?
These SMR projects won’t start providing power until the 2030s – when many governments have promised to decarbonise grids anyway. So, it can’t be a matter of clean energy, can it?
Large-scale nuclear power projects are booming almost everywhere too. They should provide cheaper cleaner power than SMRs do. So, this isn’t about nuclear either.
Renewables are, of course, much lower cost than SMRs. The government keeps telling us so. So the SMR revolution is not about cost.
The answer is, of course, too painfully obvious to say out loud.
For AI companies to bother building their own parallel power systems, they must be expecting the grid to fail somehow.
It might not be green. It might not be reliable. It might not be cheap. Or it might not be ready.
I’m not sure which. But the point is that AI has exposed the obvious. A bit like when Biden debated Trump. All of a sudden, everyone knows that everyone knows the grid will come up short. Billionaires are betting vast sums of money on it.
They’ve stopped lecturing us about installing solar panels and going on holidays. Now they’re ordering enough SMRs to keep their lights on even if the grid goes down.
At least we’ll have AI when the lights go out…
The question is whether you and I will sit on our hands and let this play out. Will we be stuck relying on the electricity grid which the most innovative people in the world expect to fail? Or will we demand change?
Who else wants electricity?
If Big Tech companies are securing enough electricity for themselves, do you think it might be a good idea to do so as well? Or do you want to continue relying on the grid that pays you to cut energy use?
I’m not suggesting an SMR in your back yard. This is about towns, large companies and other groupings of people securing their own SMRs, just as Google, Amazon and Meta have. The point is, it won’t just be data centres jumping onto the SMR revolution. Everyone will be trying to.
That was the next prediction of our Fleet Street Letter issue. In the same way modern technologies like the toilet and mobile phone spread by way of the richest and most innovative people adopting them first, before they spread rapidly, the rest of us will transition to SMRs too.
The alternative, after all, is to take a punt that Ed Miliband will be in power.
Or not in power…
You know what I mean.
Even if the Labour Party abandon their renewables energy transition and go full nuclear, do you think they would succeed? Could the government build out enough nuclear power to keep the country’s growing energy needs fed?
I doubt it.
Either way, the big loser will be renewables. They are predicated on someone paying for vast amounts of transmission infrastructure and energy storage. But who, if energy users can just turn to SMRs instead?
The nuclear power renaissance is only just beginning. It’ll take place outside the government’s reach and beyond the grid as we know it.
Investors need to pivot, now. Here’s how.
Until next time,
Nick Hubble
Editor, Fortune & Freedom
