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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. I'm Stephen Carol and

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Speaker 1: this is Here's Why, where we take one news story

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Speaker 1: and explain it in just a few minutes with our

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Speaker 1: experts here at Bloomberg. Over the roughly seventy years since

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Speaker 1: the first commercial nuclear power plant went into operation, the

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Speaker 1: popularity of splitting atoms for electricity has undergone some major swings.

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Speaker 1: After the Fukushima disaster in twenty eleven, countries including Japan

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Speaker 1: and Germany pulled back from the power source. But since

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Speaker 1: the war in Ukraine, it's experiencing a comeback as a

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Speaker 1: secure energy source, and some big names in tech are

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Speaker 1: getting in on the act.

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Speaker 2: Nuclear is a wonderful way for as one of the

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Speaker 2: sources of energy, one of the sources of sustainable energy.

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Speaker 3: Tech companies wanted the customer for green energy, and at

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Speaker 3: least for a period of time, they're willing to pay

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Speaker 3: a bit of a premium that is extremely helpful to

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Speaker 3: reboot the nuclear industry.

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Speaker 2: It's totally fair to say that AI is going to

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Speaker 2: need a lot of energy, but it will force us,

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Speaker 2: i think, to invest more in the technologies that can

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Speaker 2: deliver this.

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Speaker 1: That was in videos. CEO Jensen h Wang, Microsoft founder

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Speaker 1: Bill Gates, and Open AI's Sam Altman. There, so, here's

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Speaker 1: why artificial intelligence might need nuclear power to succeed. Bloomberger

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Speaker 1: porter Jonathan Tyrone joins me now to explain. Jonathan, first

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Speaker 1: of all, how big is the renewed interest we've seen

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Speaker 1: in nuclear power in recent years.

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Speaker 2: Oh, there's definitely legitimate growing interest in nuclear power. You

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Speaker 2: can see that in opinion polling. You can also see

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Speaker 2: that in investment in the Western world that's mostly at

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Speaker 2: this point flown into extending the lifetime of existing reactors.

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Speaker 2: The biggest builds of new reactors are occurring in China.

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Speaker 2: They have twenty new builds going on right now. That's

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Speaker 2: unprecedented anywhere else in the world. But then you know

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Speaker 2: emerging market countries arranging from Egypt to Bangladesh to India,

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Speaker 2: there are also new builds going on. The places that

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Speaker 2: really are legging behind right now are Europe and especially

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Speaker 2: the US, where there are currently zero new builds happening.

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Speaker 1: Okay, it's interesting to understand that global spread. Part of

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Speaker 1: the future conversation, or the conversation around the future of

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Speaker 1: nuclear power has been around what are called small modular reactors.

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Speaker 1: Can you just explain what are they and why are

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Speaker 1: they proving popular?

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Speaker 3: Sure?

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Speaker 2: I mean, small modular reactors are not a new concept.

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Speaker 2: People have been talking about small modular reactors for twenty

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Speaker 2: years or more. And you know these are factory assembled

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Speaker 2: models that would be around three hundred megawatts. That's about

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Speaker 2: the third of the size of a traditional reactor, which

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Speaker 2: you know is going around one thousands of megawatts or

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Speaker 2: one gigawatt. The idea behind them is that they can

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Speaker 2: be built in a factory, inter creal production and therefore

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Speaker 2: lower cost. Right now, there are more than ninety individual

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Speaker 2: designs all competing in the marketplace for acceptance in the market,

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Speaker 2: and this is actually one of the big problems. There's

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Speaker 2: a lot of investment going in what you would call

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Speaker 2: paper engineering. The only countries that have actually built in

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Speaker 2: SMR are China and Russia. The US and Europe. Again,

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Speaker 2: they have scores of different designs but have been less

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Speaker 2: effective in actually implementing them.

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Speaker 1: Do SMRs provide a solution for countries who are worried

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Speaker 1: about energy security if they're cheaper and faster to build well.

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Speaker 2: And in security is an interesting concept. It's true that

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Speaker 2: nuclear reactor can run anywhere from eighteen months to a

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Speaker 2: couple of years without receiving new fuel. However, nuclear reactors,

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Speaker 2: just like gas plants or coal plants, do need to

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Speaker 2: be refueled intermittently, and that fuel cycle is very complex

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Speaker 2: with very long supply chains. And that's also an issue

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Speaker 2: that we see in the US right now, where the

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Speaker 2: US continues to get a large share of its nuclear

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Speaker 2: fuel from Russia. That's the same problem that we witness

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Speaker 2: in Eastern Europe. So yes, SMRs and nuclear could give

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Speaker 2: more base in times of crises to change your supply chain. However,

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Speaker 2: in terms of energy security in this complex world of trade,

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Speaker 2: they are also prone to uncertainty.

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Speaker 1: So that's the supply side of the equation. But let's

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Speaker 1: talk a bit about the demand. What AI got to

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Speaker 1: do with this renewed interest in nuclear power.

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Speaker 2: Well, the AI companies, to their credit, are creating demand

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Speaker 2: for clean energy, and undoubtedly nuclear power is a much

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Speaker 2: cleaner energy source than alternative fossil fuels. And so what

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Speaker 2: the tech companies want to do is called demand aggregation,

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Speaker 2: and they are looking at putting together all of their

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Speaker 2: increased electricity demands and working with utilities to create power

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Speaker 2: price agreements. These are packages that can be financialized and

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Speaker 2: then used to finance new builds power. The issue is

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Speaker 2: that when you look at long term or middle term

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Speaker 2: electricity demand forecasts, you're still looking at data centers coming

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Speaker 2: in and around one to one point three percent of

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Speaker 2: total global electricity consumption. And even with the onset of

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Speaker 2: artificial intelligence, the growth of electricity demand for data centers

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Speaker 2: is projected to be rapid, but the level set to

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Speaker 2: remain relatively small. That's coming from the IEA. And then

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Speaker 2: you put that into comparison with other demand sources and

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Speaker 2: we're looking at desalination electric vehicles and it becomes more

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Speaker 2: of a story about Silicon Valley and Western markets trying

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Speaker 2: to reboot a clean energy source nuclear power that has

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Speaker 2: fallen by the wayside in recent decades.

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Speaker 1: And are the investments that we're seeing companies like Microsoft

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Speaker 1: and Google making going to make a difference in this.

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Speaker 2: Well, the nuclear injurt you certainly hope so, but again

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Speaker 2: we're looking at a demand deficit. And I'll cite again

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Speaker 2: next Terra Energy. This is a pro nuclear utility. They

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Speaker 2: operate nuclear power plants in the US, but even its

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Speaker 2: chief executive officer, John Ketchum, came out last week during

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Speaker 2: his quarterly earnings conference call and said that he's simply

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Speaker 2: not bullish on SMRs because while they conceivably could provide

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Speaker 2: a service of clean energy or these AI data centers,

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Speaker 2: their actual implementation and deployment is so far out he

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Speaker 2: estimates towards the second half of the twenty thirties that

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Speaker 2: they're not practically placed to serve the increased data needs

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Speaker 2: that Silicon Valley needs right now, and so he's looking

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Speaker 2: at more traditional sources of nuclear energy, such as extending

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Speaker 2: the lifetime of existing plants and then filling in generation

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Speaker 2: capacity of variable wind and solar with peak gas generation plants.

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Speaker 2: So power there's a lot of interest, there's a lot

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Speaker 2: of great ideas out there, but it still is facing

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Speaker 2: a big challenge when it comes to implementation.

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Speaker 1: Thanks to Bloomberg reporter Jonathan Tyrone. For more explanations like

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Speaker 1: this from our team of twenty seven hundred journalists and

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Speaker 1: analysts around the world. Search for quick Take on the

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Speaker 1: Bloomberg website or Bloomberg Business app. I'm Stephen Carol. This

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Speaker 1: is Here's why. I'll be back next week with more.

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Speaker 1: Thanks for listening.