A historic agreement has been established as the US government collaborates with three pioneering companies to develop nuclear reactors, with a financial commitment exceeding $80 billion. This initiative aims to enhance atomic energy production to address the increasing power demands associated with artificial intelligence data centers.
The announcement, made on Tuesday, reveals that the partnership will see the construction of nuclear reactors across the United States. This represents one of the most significant investments in nuclear energy by the US in several decades, aligning with President Donald Trump”s objective to maximize energy output from various sources, including oil, gas, coal, and nuclear energy. The surge in demand for electricity from artificial intelligence data centers marks the first substantial increase in US power needs in twenty years, placing considerable strain on parts of the electrical grid.
Under this agreement, the US government will provide financing and assist in securing permits for the nuclear plants utilizing Westinghouse Electric reactors. In return, the government will receive a participation interest that will enable it to obtain 20% of any cash distributions exceeding $17.5 billion made by Westinghouse. However, the companies did not specify when this interest would become effective, noting that the government must finalize investment decisions and enter agreements to complete the construction of the plants.
In midday trading, shares of Cameco rose over 21%, reflecting investor optimism regarding the project.
Despite the ambitious plans, the construction of new nuclear reactors in the US faces significant challenges, including rising costs and public apprehension regarding safety and nuclear waste management. The last two reactors built at the Vogtle site in Georgia faced delays of approximately seven years and incurred costs of around $35 billion, significantly higher than the initial estimate of $14 billion. Currently, no large reactors are under construction in the US.
In May, the Trump administration instructed the US Nuclear Regulatory Commission to reduce regulatory hurdles and expedite the licensing process for new reactors, aiming to shorten the timeline from several years to just 18 months. The administration has set a goal of having ten large reactors under construction by 2030. However, this directive has raised concerns among critics about the potential risks associated with rushing permits at the expense of safety.
While the Nuclear Regulatory Commission has indicated that it will respond to requests for comment regarding the deal once it resumes full operations following a government shutdown, the Department of Energy has not yet provided feedback.
There are also ongoing concerns regarding the lack of a permanent repository for radioactive waste in the US, which poses dangers for thousands of years. Currently, such waste is stored on-site at nuclear facilities in cooling pools before being transferred to hardened casks.
Nonetheless, the momentum for nuclear energy is gaining traction, fueled by the continuous demand for reliable power from major technology companies, often referred to as hyperscalers, which manage extensive cloud computing infrastructures to support growing artificial intelligence processes. Recently, NextEra Energy and Google reached an agreement to reactivate an idle nuclear plant in Iowa.
As part of the new collaboration, the government may also stipulate that Westinghouse conduct a public offering of its shares if the participation interest becomes effective and the company”s valuation exceeds $30 billion by January 2029.
The acquisition of Westinghouse by Cameco and Brookfield Renewable Partners in 2023, valued at $7.9 billion, included the company”s debt. Previously, Brookfield Business Partners had acquired Westinghouse from Toshiba Corp during its bankruptcy in 2018 for $4.6 billion. The new reactors will incorporate advanced nuclear technologies from Westinghouse.
Major tech companies, including Google, Microsoft, and Amazon, have also established agreements to procure energy from next-generation nuclear innovations such as fusion and small modular reactors. In a related effort, Constellation Energy and Microsoft are working to reactivate a unit of the Three Mile Island plant in Pennsylvania to supply power to Microsoft”s data centers.
