Bloomberg Audio Studios, Podcasts, radio news. I'm Stephen Carol and this is Here's Why, where we take one news story and explain it in just a few minutes with our experts here at Bloomberg. Over the roughly seventy years since the first commercial nuclear power plant went into operation, the popularity of splitting atoms for electricity has undergone some major swings. After the Fukushima disaster in twenty eleven, countries including Japan
and Germany pulled back from the power source. But since the war in Ukraine, it's experiencing a comeback as a secure energy source, and some big names in tech are getting in on the act.
Nuclear is a wonderful way for as one of the sources of energy, one of the sources of sustainable energy.
Tech companies wanted the customer for green energy, and at least for a period of time, they're willing to pay a bit of a premium that is extremely helpful to reboot the nuclear industry.
It's totally fair to say that AI is going to need a lot of energy, but it will force us, i think, to invest more in the technologies that can deliver this.
That was in videos. CEO Jensen h Wang, Microsoft founder Bill Gates, and Open AI's Sam Altman. There, so, here's why artificial intelligence might need nuclear power to succeed. Bloomberger porter Jonathan Tyrone joins me now to explain. Jonathan, first of all, how big is the renewed interest we've seen in nuclear power in recent years.
Oh, there's definitely legitimate growing interest in nuclear power. You can see that in opinion polling. You can also see that in investment in the Western world that's mostly at this point flown into extending the lifetime of existing reactors. The biggest builds of new reactors are occurring in China. They have twenty new builds going on right now. That's unprecedented anywhere else in the world. But then you know emerging market countries arranging from Egypt to Bangladesh to India,
there are also new builds going on. The places that really are legging behind right now are Europe and especially the US, where there are currently zero new builds happening.
Okay, it's interesting to understand that global spread. Part of the future conversation, or the conversation around the future of nuclear power has been around what are called small modular reactors. Can you just explain what are they and why are they proving popular?
Sure?
I mean, small modular reactors are not a new concept. People have been talking about small modular reactors for twenty years or more. And you know these are factory assembled models that would be around three hundred megawatts. That's about the third of the size of a traditional reactor, which you know is going around one thousands of megawatts or one gigawatt. The idea behind them is that they can be built in a factory, inter creal production and therefore
lower cost. Right now, there are more than ninety individual designs all competing in the marketplace for acceptance in the market, and this is actually one of the big problems. There's a lot of investment going in what you would call paper engineering. The only countries that have actually built in SMR are China and Russia. The US and Europe. Again, they have scores of different designs but have been less effective in actually implementing them.
Do SMRs provide a solution for countries who are worried about energy security if they're cheaper and faster to build well.
And in security is an interesting concept. It's true that nuclear reactor can run anywhere from eighteen months to a couple of years without receiving new fuel. However, nuclear reactors, just like gas plants or coal plants, do need to be refueled intermittently, and that fuel cycle is very complex with very long supply chains. And that's also an issue that we see in the US right now, where the US continues to get a large share of its nuclear
fuel from Russia. That's the same problem that we witness in Eastern Europe. So yes, SMRs and nuclear could give more base in times of crises to change your supply chain. However, in terms of energy security in this complex world of trade, they are also prone to uncertainty.
So that's the supply side of the equation. But let's talk a bit about the demand. What AI got to do with this renewed interest in nuclear power.
Well, the AI companies, to their credit, are creating demand for clean energy, and undoubtedly nuclear power is a much cleaner energy source than alternative fossil fuels. And so what the tech companies want to do is called demand aggregation, and they are looking at putting together all of their increased electricity demands and working with utilities to create power price agreements. These are packages that can be financialized and
then used to finance new builds power. The issue is that when you look at long term or middle term electricity demand forecasts, you're still looking at data centers coming in and around one to one point three percent of total global electricity consumption. And even with the onset of artificial intelligence, the growth of electricity demand for data centers is projected to be rapid, but the level set to
remain relatively small. That's coming from the IEA. And then you put that into comparison with other demand sources and we're looking at desalination electric vehicles and it becomes more of a story about Silicon Valley and Western markets trying to reboot a clean energy source nuclear power that has fallen by the wayside in recent decades.
And are the investments that we're seeing companies like Microsoft and Google making going to make a difference in this.
Well, the nuclear injurt you certainly hope so, but again we're looking at a demand deficit. And I'll cite again
next Terra Energy. This is a pro nuclear utility. They operate nuclear power plants in the US, but even its chief executive officer, John Ketchum, came out last week during his quarterly earnings conference call and said that he's simply not bullish on SMRs because while they conceivably could provide a service of clean energy or these AI data centers, their actual implementation and deployment is so far out he estimates towards the second half of the twenty thirties that
they're not practically placed to serve the increased data needs that Silicon Valley needs right now, and so he's looking at more traditional sources of nuclear energy, such as extending the lifetime of existing plants and then filling in generation capacity of variable wind and solar with peak gas generation plants. So power there's a lot of interest, there's a lot of great ideas out there, but it still is facing a big challenge when it comes to implementation.
Thanks to Bloomberg reporter Jonathan Tyrone. For more explanations like this from our team of twenty seven hundred journalists and analysts around the world. Search for quick Take on the Bloomberg website or Bloomberg Business app. I'm Stephen Carol. This is Here's why. I'll be back next week with more. Thanks for listening.