Google, Microsoft will not invest in new nuclear plants but support technology: officials

Data technology companies will not invest directly in new nuclear power projects to meet skyrocketing demand for clean, firm power, but seek to sign power offtake agreements with new rate structures that will spur development of the technology, Google and Microsoft executives said during an American Nuclear Society panel June 17 in Las Vegas.

"We are not going to own a nuclear project," said Microsoft's Adrian Anderson, general manager of energy and sustainability. Company capital "is better deployed on data centers because we make money," Anderson said.

Tech companies "are not going to write checks," said Peter Freed, former clean Energy Buyers Alliance board member and former director of energy strategy at social media company Meta.

But those companies support nuclear power and recognize "we need to have nuclear technology to meet the load growth" of cloud data centers and AI centers, Freed added.

Google Head of Energy Market Innovation Briana Kobor said data centers are "a backbone of our modern economy," adding that according to US Department of Commerce data the sector makes up 10% of gross domestic product.

Google has committed to using 100% carbon free energy by 2030 and needs advanced nuclear generation, among other technologies, to achieve it, Kobor said.

Such power demand has intensified in recent years with the growth of artificial intelligence, the panelists said.

Data companies have met projected load demand through power purchase agreements for clean energy, mainly wind and solar, with energy suppliers, approved by state commissions, they said.

Tech companies are willing to pay a premium for such power from new sources but have been stymied by state regulations and policies that do not encourage timely deployment of new technologies, Kobor said.

"PPAs are often not integrated with broader grid planning and utility investment processes," Kobor wrote in a Google blogpost June 7.

She also told the ANS audience that public utility commissions typically prefer and approve agreements with the lowest cost renewable projects and lowest avoided cost credits, an approach that discourages a diverse generation mix.

That is why Google is trying to pioneer a clean transition tariff, a new type of energy rate structure, through its recent agreement with NV Energy, a Berkshire Hathaway Energy subsidiary, for the supply of geothermal power, Kobol said.

The proposal was filed with Nevada energy regulators June 7.

According to analysts at Sightline Climate in a June 17 note, "the CTT can pave the way for commercial customers willing to pay a premium for clean, firm power."

Kobor said she expects to use a similar model to engage with utilities for advanced reactors, noting the agreement it signed with Duke Energy in May on proposed new tariffs, including CTT, to allow large energy customers to support carbon-free generation projects.

Duke announced May 29 that it had signed similar agreements with Amazon, Google and Nucor to use "innovative financing structures and contributions that address project risk to lower costs of emerging technologies," including advanced nuclear reactors.

Such offtake arrangements with long-term, credit-worthy buyers "can unlock" capital investment, Freed said. "There is plenty of capital."

Limited options for more federal support

"We now need a collaborative model with different tariffs" to overcome financing barriers and mitigate construction risk, said Microsoft's Anderson. "We don't want to burn ratepayers."

And while Microsoft is able to pay a premium, power buyers are "not responsible for risk," Anderson said. Cost overrun insurance, which nuclear industry officials have increasingly said is required for new nuclear plant construction to advance, is acceptable for regulatory delays or external events outside a developer's control, he said. "But not for other reasons."

The Breakthrough Institute's Adam Stein said there is limited appetite in Congress for measures that enable that insurance, given other recent legislation that has supported the US nuclear industry like the Inflation Reduction Act, which includes several tax credits for new nuclear capacity.

But states are "worried a lot" about cost overruns, Stein added, saying that policy reforms at the public utility commissions are needed.

He also noted the ongoing need for modernization at the Nuclear Regulatory Commission, where over 30 rulemakings are underway or planned. Rulemakings can take four to five years, Stein said, threatening the timely approval of the advanced reactor designs data companies are hoping to support.