Amazon is betting on nuclear power and investing more than $500 million in the development of small modular reactors

Amazon Web Services is investing more than $500 million in nuclear energy, announcing three projects from Virginia to Washington state. AWS, AmazonThe cloud computing subsidiary has a huge and increasing need for clean energy as it expands its services to include generative AI. It's also part of Amazon's path to net-zero carbon emissions.

AWS announced that it has signed an agreement with Dominion EnergyVirginia's utility company is expected to explore developing a small modular nuclear reactor (SMR) near Dominion's existing North Anna nuclear power plant. Nuclear reactors do not produce carbon emissions.

An SMR is an advanced type of nuclear reactor with a smaller footprint, allowing it to be built closer to the grid. They also have shorter construction times than traditional reactors, meaning they can come online more quickly.

Amazon is the latest major tech company to buy into nuclear energy to meet growing data center needs. Earlier this week, Google announced it would buy electricity from SMR developer Kairos Power. Constellation Energy is relaunching Three Mile Island to power Microsoft data centers.

“We see demand for gigawatts of power in the coming years, and there will not be enough wind and solar projects to meet the demand. “So nuclear power is a huge opportunity,” said Matthew Garman, CEO of AWS. “Also, with SMRs, the technology is really advancing to the point where there will be a new technology that is safe and that will be easy to manufacture in a much smaller form.”

Virginia is home to nearly half of all data centers in the United States, with an area in northern Virginia known as Data Center Alley and the majority of it located in Loudon County. An estimated 70% of the world's Internet traffic passes through Data Center Alley every day.

Dominion powers approximately 3,500 megawatts from 452 data centers in its Virginia service area. About 70% are located in Data Center Alley. According to Dominion Energy, a single data center typically requires about 30 megawatts or more. Bob Blue, its president and CEO, said in a recent quarterly earnings conference call that the utility is now receiving individual requests for 60 megawatts to 90 megawatts or more. Dominion expects electricity demand to increase by 85% over the next 15 years. AWS expects the new SMRs to bring at least 300 megawatts of power to the Virginia region.

“Small modular nuclear reactors will play a critical role in positioning Virginia as a leading nuclear innovation center,” Virginia Governor Glenn Youngkin said in a news release. “Amazon Web Services’ commitment to this technology and its partnership with Dominion is a significant step forward in meeting the future energy needs of a growing Virginia.”

AWS plans to invest $35 billion to establish multiple data center campuses across Virginia by 2040, according to an announcement from Youngkin last year.

““These SMRs feed directly into the grid, so they will power everything, part of it is the data centers, but anything connected to the grid will benefit,” Garman added.

Amazon also announced a new agreement with utility Energy Northwest, a consortium of state public utilities, to finance the development, licensing and construction of four SMRs in Washington state. The reactors will be built, owned and operated by Energy Northwest, but will deliver energy directly to the grid, which will also help power Amazon's operations.

According to the agreement, Amazon has the right to purchase electricity from the first four modules. Energy Northwest has the option to build up to eight additional modules. This electricity would also be available to Amazon and utilities in the Northwest to power homes and businesses.

The SMRs are being developed using technology from Maryland-based X-energy, a developer of SMRs and fuel. Along with Amazon's other announcements, Amazon's Climate Pledge Fund announced that it is the lead anchor in a $500 million funding round for X-Energy. The Climate Pledge Fund is its corporate venture capital fund that invests in early-stage sustainability companies. Other investors include Citadel founder and CEO Ken Griffin, affiliates of Ares Management Corp., NGP and the University of Michigan.

“Amazon and X-energy are poised to define the future of advanced nuclear energy in the commercial market,” said J. Clay Sell, CEO of X-energy. “To fully realize the possibilities of artificial intelligence, we must bring clean, safe and reliable electrons online with proven technologies that can scale and grow with demand.”

The Biden administration has poured billions of dollars into clean energy production. As part of this AWS announcement, US Energy Secretary Jennifer Granholm said $900 million in new funding is now available for those wanting to deploy more SMRs.

“We want these data centers to be built in the United States for a variety of reasons, including national security. We need additional power to do that, and we want that power to be clean power,” Granholm said.

Last spring, AWS co-invested in a nuclear energy project Talen EnergySigned an agreement to purchase nuclear energy from the Company's existing Susquehanna Steam Electric Station, a nuclear power plant in Salem Township, Pennsylvania. AWS also purchased Talen's adjacent nuclear-powered data center campus for $650 million.