Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. I'm Stephen Carol and
Speaker 1: this is Here's Why, where we take one news story
Speaker 1: and explain it in just a few minutes with our
Speaker 1: experts here at Bloomberg. Over the roughly seventy years since
Speaker 1: the first commercial nuclear power plant went into operation, the
Speaker 1: popularity of splitting atoms for electricity has undergone some major swings.
Speaker 1: After the Fukushima disaster in twenty eleven, countries including Japan
Speaker 1: and Germany pulled back from the power source. But since
Speaker 1: the war in Ukraine, it's experiencing a comeback as a
Speaker 1: secure energy source, and some big names in tech are
Speaker 1: getting in on the act.
Speaker 2: Nuclear is a wonderful way for as one of the
Speaker 2: sources of energy, one of the sources of sustainable energy.
Speaker 3: Tech companies wanted the customer for green energy, and at
Speaker 3: least for a period of time, they're willing to pay
Speaker 3: a bit of a premium that is extremely helpful to
Speaker 3: reboot the nuclear industry.
Speaker 2: It's totally fair to say that AI is going to
Speaker 2: need a lot of energy, but it will force us,
Speaker 2: i think, to invest more in the technologies that can
Speaker 2: deliver this.
Speaker 1: That was in videos. CEO Jensen h Wang, Microsoft founder
Speaker 1: Bill Gates, and Open AI's Sam Altman. There, so, here's
Speaker 1: why artificial intelligence might need nuclear power to succeed. Bloomberger
Speaker 1: porter Jonathan Tyrone joins me now to explain. Jonathan, first
Speaker 1: of all, how big is the renewed interest we've seen
Speaker 1: in nuclear power in recent years.
Speaker 2: Oh, there's definitely legitimate growing interest in nuclear power. You
Speaker 2: can see that in opinion polling. You can also see
Speaker 2: that in investment in the Western world that's mostly at
Speaker 2: this point flown into extending the lifetime of existing reactors.
Speaker 2: The biggest builds of new reactors are occurring in China.
Speaker 2: They have twenty new builds going on right now. That's
Speaker 2: unprecedented anywhere else in the world. But then you know
Speaker 2: emerging market countries arranging from Egypt to Bangladesh to India,
Speaker 2: there are also new builds going on. The places that
Speaker 2: really are legging behind right now are Europe and especially
Speaker 2: the US, where there are currently zero new builds happening.
Speaker 1: Okay, it's interesting to understand that global spread. Part of
Speaker 1: the future conversation, or the conversation around the future of
Speaker 1: nuclear power has been around what are called small modular reactors.
Speaker 1: Can you just explain what are they and why are
Speaker 1: they proving popular?
Speaker 3: Sure?
Speaker 2: I mean, small modular reactors are not a new concept.
Speaker 2: People have been talking about small modular reactors for twenty
Speaker 2: years or more. And you know these are factory assembled
Speaker 2: models that would be around three hundred megawatts. That's about
Speaker 2: the third of the size of a traditional reactor, which
Speaker 2: you know is going around one thousands of megawatts or
Speaker 2: one gigawatt. The idea behind them is that they can
Speaker 2: be built in a factory, inter creal production and therefore
Speaker 2: lower cost. Right now, there are more than ninety individual
Speaker 2: designs all competing in the marketplace for acceptance in the market,
Speaker 2: and this is actually one of the big problems. There's
Speaker 2: a lot of investment going in what you would call
Speaker 2: paper engineering. The only countries that have actually built in
Speaker 2: SMR are China and Russia. The US and Europe. Again,
Speaker 2: they have scores of different designs but have been less
Speaker 2: effective in actually implementing them.
Speaker 1: Do SMRs provide a solution for countries who are worried
Speaker 1: about energy security if they're cheaper and faster to build well.
Speaker 2: And in security is an interesting concept. It's true that
Speaker 2: nuclear reactor can run anywhere from eighteen months to a
Speaker 2: couple of years without receiving new fuel. However, nuclear reactors,
Speaker 2: just like gas plants or coal plants, do need to
Speaker 2: be refueled intermittently, and that fuel cycle is very complex
Speaker 2: with very long supply chains. And that's also an issue
Speaker 2: that we see in the US right now, where the
Speaker 2: US continues to get a large share of its nuclear
Speaker 2: fuel from Russia. That's the same problem that we witness
Speaker 2: in Eastern Europe. So yes, SMRs and nuclear could give
Speaker 2: more base in times of crises to change your supply chain. However,
Speaker 2: in terms of energy security in this complex world of trade,
Speaker 2: they are also prone to uncertainty.
Speaker 1: So that's the supply side of the equation. But let's
Speaker 1: talk a bit about the demand. What AI got to
Speaker 1: do with this renewed interest in nuclear power.
Speaker 2: Well, the AI companies, to their credit, are creating demand
Speaker 2: for clean energy, and undoubtedly nuclear power is a much
Speaker 2: cleaner energy source than alternative fossil fuels. And so what
Speaker 2: the tech companies want to do is called demand aggregation,
Speaker 2: and they are looking at putting together all of their
Speaker 2: increased electricity demands and working with utilities to create power
Speaker 2: price agreements. These are packages that can be financialized and
Speaker 2: then used to finance new builds power. The issue is
Speaker 2: that when you look at long term or middle term
Speaker 2: electricity demand forecasts, you're still looking at data centers coming
Speaker 2: in and around one to one point three percent of
Speaker 2: total global electricity consumption. And even with the onset of
Speaker 2: artificial intelligence, the growth of electricity demand for data centers
Speaker 2: is projected to be rapid, but the level set to
Speaker 2: remain relatively small. That's coming from the IEA. And then
Speaker 2: you put that into comparison with other demand sources and
Speaker 2: we're looking at desalination electric vehicles and it becomes more
Speaker 2: of a story about Silicon Valley and Western markets trying
Speaker 2: to reboot a clean energy source nuclear power that has
Speaker 2: fallen by the wayside in recent decades.
Speaker 1: And are the investments that we're seeing companies like Microsoft
Speaker 1: and Google making going to make a difference in this.
Speaker 2: Well, the nuclear injurt you certainly hope so, but again
Speaker 2: we're looking at a demand deficit. And I'll cite again
Speaker 2: next Terra Energy. This is a pro nuclear utility. They
Speaker 2: operate nuclear power plants in the US, but even its
Speaker 2: chief executive officer, John Ketchum, came out last week during
Speaker 2: his quarterly earnings conference call and said that he's simply
Speaker 2: not bullish on SMRs because while they conceivably could provide
Speaker 2: a service of clean energy or these AI data centers,
Speaker 2: their actual implementation and deployment is so far out he
Speaker 2: estimates towards the second half of the twenty thirties that
Speaker 2: they're not practically placed to serve the increased data needs
Speaker 2: that Silicon Valley needs right now, and so he's looking
Speaker 2: at more traditional sources of nuclear energy, such as extending
Speaker 2: the lifetime of existing plants and then filling in generation
Speaker 2: capacity of variable wind and solar with peak gas generation plants.
Speaker 2: So power there's a lot of interest, there's a lot
Speaker 2: of great ideas out there, but it still is facing
Speaker 2: a big challenge when it comes to implementation.
Speaker 1: Thanks to Bloomberg reporter Jonathan Tyrone. For more explanations like
Speaker 1: this from our team of twenty seven hundred journalists and
Speaker 1: analysts around the world. Search for quick Take on the
Speaker 1: Bloomberg website or Bloomberg Business app. I'm Stephen Carol. This
Speaker 1: is Here's why. I'll be back next week with more.
Speaker 1: Thanks for listening.