Tech giants desperate to power AI data centers are turning to nuclear disaster sites - despite the risks

By Therese Poletti

And just so companies can offer better chatbots, improve efficiency and kill jobs?

The tech industry's need for more power for data centers running artificial intelligence is now so desperate that companies are turning to nuclear disaster sites, despite the potential risks.

Microsoft Corp. (MSFT) and Constellation Energy Corp. (CEG) said Friday that they had signed a 20-year power-purchase agreement, with Microsoft buying power generated from the restart of Three Mile Island's Unit 1 facility in Pennsylvania. The deal will pave the way for the launch of the Crane Clean Energy Center and restart of Three Mile Island Unit 1, which is expected to be online by 2028.

Unit 1 is located adjacent to Three Mile Island Unit 2, which melted down in 1979 in what is widely considered the worst nuclear-power accident in U.S. history.

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"Powering industries critical to our nation's global economic and technological competitiveness, including data centers, requires an abundance of energy that is carbon-free and reliable every hour of every day, and nuclear plants are the only energy sources that can consistently deliver on that promise," said Joe Dominguez, president and chief executive of Constellation, in a statement.

Microsoft is not alone looking at nuclear power as a potential solution to the power crunch that appears to be looming for AI data centers. Oracle Corp. (ORCL) co-founder Larry Ellison told analysts last week that the company is looking at nuclear power for its Oracle Cloud business, as it builds out more data centers across the world.

"My God, we're building nuclear reactors," Ellison said, admitting that it may sound completely made up. "But it's not. You need a lot of power to power acres of these - it means acres of these GPU clusters. I'm not sure, has anything like this ever happened before?"

Ellison went on to say that a company needs to spend about $100 billion to build a data center that can power AI servers. "Yeah, $100 billion - that's going to get you in the game," he said.

Amazon.com Inc. (AMZN) has also invested in nuclear power for its Amazon Web Services cloud business. In March, Amazon said it would spend $650 million to buy a nuclear-powered data-center campus adjacent to a nuclear power facility from Talen Energy Corp. (TLN)

Finding the power to run AI data centers is increasingly becoming a bigger problem - and now, some communities are banding together to keep data centers out. Companies are also looking at ways to create their own energy, such as Amazon and Alphabet Inc.'s (GOOGL) (GOOG) clean-energy efforts. Amazon now has solar and wind projects in 20 U.S. states as well as 27 different countries.

Read also: Amazon and other tech giants can't afford to lose power so they are making their own.

"There are places in the country where people are saying, 'No more data centers,'" said Jack Gold, principal analyst at J. Gold Associates. He noted that lawmakers in Loudoun County, Va., just voted in regulations requiring plans for new data centers to be submitted for approvals.

Still, Gold said that nuclear "is a good solution to the growing needs of data centers that consume vast amounts of electricity."

"Nuclear is basically clean, except for having to get rid of the nuclear cores once they are used up," he added. "Of course, safety is a concern, but the industry has made great strides since the Three Mile Island disaster. So this is probably a good way to go."

With all the fears around AI and how it could potentially run amok in ways that humans cannot imagine yet, its power-hungry component adds another element of distress. While companies are trying to address their power-consumption needs, it is frightening to realize how much power AI servers consume and are poised to consume in the future.

And why - just so companies can offer better chatbots, improve efficiency and kill jobs?

-Therese Poletti

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09-21-24 0545ET

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