Feb 27, 2024 - Technology

AI surge boosts the ambitions of a nuclear startup

Photo illustration of Clay Sell with an image of the XE-100 Reactor

X-energy CEO Clay Sell. Photo illustration: Gabriella Turrisi/Axios. Photo: Aaron M. Sprecher/Bloomberg via Getty Images, courtesy of X-energy

X-energy, a startup developing small modular reactors (SMRs), sees an attractive market in slaking the energy thirst of the rapidly unfolding artificial intelligence boom.

Why it matters: The company's ambitions underscore AI's role as an emerging demand source — and atomic power's unique but underdeveloped position as one of world's carbon-free energy sources.

  • The rise of AI is firmly on the radar of X-energy, a prominent player in the SMR field that's already talking with tech companies about supplying power.

The big picture: X-energy CEO Clay Sell called the round-the-clock needs of data centers a good fit for small reactors.

  • "The most important thing when you're running 24-7 is reliability," Sell told Axios at X-energy's Rockville, Maryland, headquarters.
  • AI will join electrification of the economy — think electric vehicles, for instance — in boosting power demand after many years of largely flat consumption, he said.

The intrigue: Sell, a top DOE official under George W. Bush, doesn't think political change in D.C. will hinder SMRs.

  • "I don't want to sound too Pollyannish. But I do not regard the outcome of the presidential election, or the congressional election, to materially impact the nuclear agenda...It is deeply, deeply supported on both sides of the aisle."
  • The company is backed by DOE's Advanced Reactor Demonstration Projects (ARDP), which began in the Trump era and first received major funding in the 2021 infrastructure law.

Catch up fast: While Sell riffed on serving AI needs, X-energy has projects further along with specific customers.

  • It's working with Dow to deploy four reactors at the chemical giant's Seadrift Operations site in Texas by 2030, a project receiving up to $1.23 billion in DOE funding.
  • X-energy is also working with Washington State-based utility Energy Northwest.

Reality check: SMRs face regulatory and financial challenges.

  • Scaling new tech is hard — especially while grappling with supply chain inflation and cost of capital increases also hitting other industries.
  • The SMR sector suffered a blow last year when NuScale's planned Idaho project with Utah Associated Municipal Power Systems collapsed under the weight of hefty cost increases.
  • X-energy and Ares Management last year canceled plans to bring X-energy public via a SPAC deal. But weeks later, X-energy raised another $80M from backers, including Ares, to bring its series C round to $235M.

What's next: Sell still expects X-energy will go public — eventually.

  • "I don't anticipate reviving a SPAC approach," he said. "I do anticipate in the future we will go to the public markets...in the classical IPO approach."
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