Meta Flirts With Nuclear For AI; It Is Still Married To Gas

The gathering excitement about new nuclear plants powering artificial intelligence is tainted by a whiff of gas.

Meta Platforms Inc. has just announced it will issue a formal request for proposals from developers to build between one and four gigawatts of new nuclear capacity to help meet its growing demand for energy to run data centres. This is potentially significant. To date, Big Tech's deals for nuclear power have centred mainly on taking electricity from existing plants or reviving a recently closed reactor. Yet such arrangements are inherently limited, especially after federal utility regulators ruled against Amazon.com Inc.'s deal for a nuclear-powered, co-located data centre.

The holy grail, however, is for some deep-pocketed and motivated company to take on the risk of underwriting a brand-new nuclear plant. A recent agreement whereby Alphabet Inc.'s Google contracted to take power from small modular reactors built by Kairos Power LLC represented a tentative step forward in this regard. Meta's RFP is on a grander scale, up to eight times the capacity of the Kairos deal, encompassing both modular and traditional reactors. At the upper end of the capacity range, building those reactors would cost north of $30 billion based on (likely optimistic) Department of Energy estimates.

Timing is the all important factor here, though. Google envisions getting the full 500 megawatts from Kairos just over a decade from now. Meta, meanwhile, expects fission to commence "starting in the early 2030s." This is not surprising; building new nuclear plants, small or large, in the US will take years. Even if the upfront outlay by data centre operators is small, their intent is important for nuclear developers, who can tout it in funding rounds and to government agencies dispensing grants.

Quite clearly, though, the companies racing to dominate AI aren't going to just hang around for a decade (and perhaps more) to plug in.

A couple of weeks ago, the Shreveport Times reported that a Louisiana utility regulator had indicated that Meta would be the customer for a planned multi-billion dollar expansion of gas-fired power plants in the state by Entergy Corp. (The identity of the customer had been something of a mystery after Entergy filed a redacted proposal with regulators.) The three plants add up to about 2.3 gigawatts of new capacity, two-thirds of which would be sited close to Meta's planned data centre in northeast Louisiana. According to Entergy's filing, Meta has also committed to funding 1.5 gigawatts of solar and battery capacity for Entergy's "long-term planning needs" as well as contribute to a proposed carbon-capture project.

Big Tech's interest in new nuclear power is part of its own long-term planning needs, given the sector's vaunted commitments to carbon-free power. But Meta's contract with Entergy is just the latest sign that immediate needs for energy will be met with what is immediately available. "The nuclear plan is an RFP - the Louisiana projects are PPAs [power purchase agreements] and that's a chasm of difference," observes Chris Ruppel, director of onsite power at MARA Holdings Inc., a crypto-mining and energy services company.

In September, Energy Capital Partners LLC, a private equity firm, bought four power plants - three of them gas-fired and one, notably, a giant old coal burner - sited perfectly to feed growing data centre needs on the PJM grid serving a swath of the Midwest and mid-Atlantic states. Meanwhile, a unit of Southern Co., a large utility in the Southeast, won approval earlier this year to build 1.4 gigawatts of gas-and-oil fired capacity to meet projected demand increases tied partly to data centres. Last month, Energy Transfer LP, a large pipeline operator, said it had received interconnection requests from more than 40 prospective data centre projects adding up to 10 billion cubic feet per day of incremental demand, equivalent to more than 10% of current US gas demand.

Needless to say, there is a fair bit of hype around the data centre energy boom. Still, one of the more measured estimates, from Andy DeVries at CreditSights, projects an incremental 600 terawatt-hours of data centre demand by 2030 (equivalent to about 15% of current US grid demand). There will be no new reactors available to meet that, so it will be powered by a mix of older plants staying open rather than retiring, plus new renewables and, yes, gas-fired power (DeVries estimates this will require a net 4.6 billion cubic feet per day extra, 5% of total current demand). For the rest of the decade, expect new nuclear plans to generate all the buzz, while gas does a lot of the actual generation.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)