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Oct. 18, 2024, 2:01 a.m.
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Big Tech's Push for Nuclear Power: The Rise of SMRs in the US

Here’s a rewritten version of the text with minimal loss of detail: --- This is the main takeaway from today's Morning Brief, which you can subscribe to for your daily dose of: - The chart of the day - What we’re monitoring - Recommended readings - Economic data releases and corporate earnings Nuclear power in the US is on the verge of a revival, driven by Big Tech's seemingly endless electricity demands to sustain AI-based data centers. Three recent developments highlight this trend: Microsoft (MSFT) has reached an agreement with Constellation Energy (CEG) to reactivate a reactor at Three Mile Island, Google (GOOG, GOOGL) has teamed up with Kairos to purchase energy from small modular nuclear reactors (SMRs), and Amazon (AMZN) is spearheading a $500 million funding initiative for another SMR firm, X-Energy. Historically, the nuclear sector in the US has seen limited growth. Despite having 94 nuclear reactors, the Energy Information Administration reports that their total generating capacity has hovered around 20% of the nation’s electricity since the late 1980s. The recent launch of the Vogtle plant's third and fourth reactors in Georgia marked the first new units in seven years, largely due to rigorous safety and design regulations enforced by authorities. However, with Big Tech making significant investments, a shift could be on the horizon. As chips and energy serve as the foundational elements of the AI revolution, revisiting nuclear power appears sensible. Yet, potential investors should keep several factors in mind. Firstly, projects like the Three Mile Island reactor, which isn't utilizing cutting-edge technology, will take time to materialize—it's expected to come online by 2028. Regarding newer technologies, the aim of SMRs is to develop smaller, cost-effective versions of larger nuclear fission reactors, offering greater flexibility, according to Kairos CEO Mike Laufer in an interview with Yahoo Finance. Currently, SMRs are not operational in the US; companies receiving investments are still in the experimental phase. For instance, privately owned Kairos has received regulatory approval to construct a demonstration unit, which will initially run on non-nuclear power to exhibit its cooling system—deemed safer by Laufer. This demo is slated for 2030. Another challenge for investors is the scarcity of publicly traded opportunities, particularly those focusing solely on nuclear. Many related stocks have seen significant gains this year, with NuScale Power (SMR) rising over 450%.

Oklo (OKLO), with backing from OpenAI's Sam Altman, went public via SPAC in May, leading to an over 80% increase in shares since then. The anticipated surge in electricity demand from data centers has also propelled utility company stocks to soaring levels, transcending the nuclear sector. As their rates are regulated, the investment hinges on projected demand expansion. For instance, the ETF tracking S&P 500 utility stocks has seen a nearly 30% increase this year, on track for a record gain. Uranium producers have also attracted investments linked to nuclear power. Companies like Vancouver’s Uranium Energy (UEC) and Cameco (CCJ) have experienced substantial growth and are nearing record levels. All these developments hinge on the approval and successful implementation of SMRs. There is a growing influx of capital aiming in this direction, especially with Big Tech eager for clean energy solutions. “Currently, these projects are untested, ” noted George Gianarikas, a Canaccord Genuity analyst focusing on renewable energy, in a phone interview. “There aren’t many instances of functioning small modular reactors in the world. They remain a promise. ” Julie Hyman co-hosts Market Domination on Yahoo Finance. Follow her on social media @juleshyman. Click here for the latest technology news affecting the stock market. --- Feel free to let me know if you need any other revisions!



Brief news summary

The latest Morning Brief highlights a renewed interest in nuclear energy, spurred by the increasing electricity demands from AI data centers. Major technology companies are making significant investments, signaling a potential revival of the U.S. nuclear sector. Notable collaborations include Microsoft and Constellation Energy working to restart a reactor at Three Mile Island, as well as Google and Kairos exploring energy solutions using small modular reactors (SMRs). Moreover, Amazon is pledging $500 million to SMR developer X-Energy. Despite having 94 reactors, the U.S. nuclear industry has seen stagnant output, generating only 20% of the nation's electricity since the 1980s due to stringent regulations. The recent Vogtle reactor additions in Georgia signify progress as the first new reactors in seven years. Tech investments could significantly influence the energy market, underlining the importance of nuclear power for future energy requirements. However, advancements may be slow; Three Mile Island's reopening is projected for 2028, and while SMRs are promising for cost and flexibility, they remain experimental and need further regulatory approval. Growing interest in utility stocks and uranium firms reflects an increasing enthusiasm for nuclear investments, despite the inherent risks involved and the absence of operational SMR models.

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