Amazon invests big in small modular nuclear reactors

Driving the news: Amazon announced Wednesday it signed an agreement with the regional utility Energy Northwest in central Washington state to invest in developing four SMRs at its Columbia Generating Station in Richland, Washington.

• Energy Northwest would build, own and operate these reactors, which would provide about 320 megawatts to start.
• The project would potentially increase to 12 reactors producing 960 megawatts. This would be enough electricity to power 770,000 homes, according to Amazon.
• The electricity provided to the grid would also help power Amazon's operations. Amazon Web Services is one of the top cloud computing services worldwide.

Zoom in: Small modular reactors are a next-generation technology with a smaller physical footprint than traditional nuclear plants.

• These reactors, however, still face economic and regulatory hurdles as they scale up.

By the numbers: Via its Climate Pledge Fund, the company also announced Wednesday that it led a $500 million investment round in SMR reactor and fuel company X-energy, which would design and build the reactors used in the Energy Northwest project.

• The aim, Amazon said, is to help bring more than 5 gigawatts of new nuclear energy projects onto the grid during the next 15 years.
• The funding is part of a C-1 round in X-energy that includes other investors, including Ken Griffin, CEO of Citadel.

What they're saying: "I think what Amazon is doing is completely new and different and transformative to the sector," X-energy CEO Clay Sell told Axios in an interview.

• He said the investments will help accelerate SMR deployment in ways that power purchase agreements, which several tech companies have signed, won't do.
• "I think it is reflective of the recognition [that] the biggest constraint on the growth of the data center and hyper scaling industry is the availability of power, and that someone has to lead to make it happen," Sell said.

The intrigue: These agreements come in addition to a memorandum of understanding that Amazon has signed to explore an SMR project at Dominion Energy's North Anna nuclear power station in Virginia that would supply at least 300 megawatts of power.

• Dominion is the main utility serving Northern Virginia's Data Center Alley, where many AWS facilities are located.
• Dominion and other utilities across the country are considering their options for how to get more electrons onto the grid quickly to keep up with rising energy demands from data centers, EVs, the electrification of homes and businesses and new manufacturing facilities.
• Right now, one of their cheapest, most ready-made options is to build new natural gas plants, but those come at the cost of further contributing to climate change.

Separately, Dominion laid out a new integrated resource plan on Tuesday that shows low carbon sources, including nuclear, meeting about 80% of its new energy demand during the next 15 years, and new natural gas plants at 20%.

Between the lines: Technology companies including Google, Microsoft and Amazon have made ambitious climate commitments. But they have seen setbacks in trying to meet those goals amid the rapid growth in generative AI-related data centers, along with other trends driving an increase in power demand.

• Amazon has pledged to be net zero as a company by 2040.

A report Bain published last week warned U.S. energy demand tied to AI data centers would require utilities to increase annual generation by up to 26% by 2028.

• Bain's Aaron Denman told Axios that nuclear, including SMRs, has a key role to play due to data centers' growing needs for clean, reliable power sources.
• Denman, along with David Brown of Wood Mackenzie, said the Amazon-related announcements are significant and help send a market signal that would support further nuclear development.

Yes, but: Don't look to new nuclear projects with longer lead times to meet the near-term increase in energy demand, cautions Tyler Norris of Duke University.

• Still, this announcement shows "the next phase," he said, with technology companies now taking direct stakes in next-generation nuclear companies.

Zoom out: Amazon's announcements come during the same week that its cloud computing rival Google announced a deal to purchase energy from SMRs that startup Kairos Power plans to start bringing online by 2030.

• Amazon's commitments go further and include deals to build new SMRs and move forward with development, licensing and construction, Amazon told Axios in a statement.

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