nuclear-news

Nuclear power is ‘overblown’ as an energy source for data centers, power company CEO says

CNBC Spencer Kimball, MON, JUN 10

KEY POINTS

• AES Corporation CEO Andrés Gluski said the “euphoria” over nuclear power has been a “little overblown.”
• AES is a major power provider for large tech companies building out data centers, with more than 40% of its backlog coming from customers including Amazon, Microsoft and Google.
• Gluski said renewables are the future, though natural gas will be needed as a transition fuel.

The euphoria over nuclear energy as a power source for data centers is “overblown,” the CEO of a major power provider for large tech companies told CNBC in an interview Monday.

AES Corporation CEO Andrés Gluski said renewable energy is the future, though natural gas will also play a role as a transition fuel. Nuclear power, on the other hand, faces challenges in meeting the growing power demand from data centers, Gluski said.

AES is a major power provider for large tech companies building out data centers, with more than 40% of its 12.7 gigawatt backlog coming from customers including Amazon, Microsoft and Google, according to its most recent earnings presentation to investors.

……………………Gluski said the “euphoria” over nuclear power is a “little overblown.” There is only so much existing nuclear energy that merchant power providers can re-contract to sites such as data centers, the CEO said.

“The question is, going forward, what’s the price of new nuclear,” Gluski said, adding that only one new nuclear plant has been built in the U.S. in decades and it came in far above budget.

‘The future is going to be renewable’

The second of two new nuclear reactors at Vogtle Plant in Georgia came online in April, but the project was seven years behind schedule and cost double the original projections, according to the Energy Information Administration. The reactors, operated by Georgia Power, are the first newly-constructed nuclear units built in the U.S. in more than 30 years, according to the Department of Energy.

……………………..Gluski pointed to the recent agreement between Microsoft and Brookfield Asset Management for 10.5 gigawatts of renewable energy between 2026 and 2030 as a sign of the future. Microsoft and Brookfield described the agreement as the largest renewable purchase ever between two corporate partners.

“It tells you that’s where most of the energy is going to be coming from,” Gluski said. “They are cheaper, they are clean and quite frankly easier to site, so the future is going to be renewable energy.”…………………………….

Solar, storage and wind represented about 95% of the power capacity in line waiting for connection to the grid at the end of 2023, while gas was just 3% and a grab bag made up the rest, according to Lawrence Berkeley National Laboratory. Renewables and storage in line for connection is nearly twice the installed capacity of the U.S. power plant fleet.

AES has already signed long-term contracts with data centers to provide them hourly matched renewable energy 24/7, Gluski said. “We’ve done that already for two years. So we can do that today,” he said.

AES signed an agreement with Google in 2021 to power its Virginia data center campus with 90% carbon-free energy on an hourly basis using a combination of wind, solar, hydro and battery storage resources.

The power company recently signed an agreement with Amazon for an additional gigawatt of solar and storage at a site in Kern County, California, bringing the project to a total of two gigawatts in a 15-year contract that is expected to come online in 2025 to 2026. AES has described the agreement as the largest solar and storage project in the U.S.

All told, the power company has signed agreements to provide Amazon with 3.1 gigawatts of power, Microsoft with 1.7 gigawatts, and Google with 800 megawatts, according to its first quarter earnings presentation.

“All of them want to be part of an energy transition,” Gluski said. “I don’t see anybody saying build me gas and coal plants to power my data centers, unless it’s a temporary situation, give me power from your gas plant until the renewables are available.”

AES stock is up 26% over the past three months and 6% year to date. Some 67% of Wall Street analysts rate AES the equivalent of a buy, 25% have a hold on the company’s stock and 8% rate it the equivalent of a sell.  https://www.cnbc.com/2024/06/10/nuclear-is-overblown-as-energy-source-for-data-centers-aes-ceo-says.html

June 12, 2024 - Posted by Christina Macpherson | ENERGY, USA