Amazon backs 12 nuclear reactors to meet AI power demand
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Amazon is funding the development of a proposed 960-megawatt nuclear power plant in Indiana as the technology company seeks new sources of electricity to meet growing demand from its data centers.
Announced on Oct. 19, the project would feature 12 small modular reactors (SMRs) supplied by nuclear technology developer X-energy. American Electric Power (AEP) would operate the facility, which is planned near the former Breed Generating Station coal plant in Sullivan County.
Amazon will provide development funding and intends to purchase electricity through a long-term agreement if the plant is built. According to AEP, the proposed arrangement would cover construction and operating costs while protecting existing utility customers from additional expenses.
However, the project remains at an early stage. AEP and X-energy must complete feasibility studies, obtain regulatory approvals and make a final investment decision before construction can begin. Neither a construction cost nor an operating date has been announced.
The agreement reflects growing interest in nuclear power among technology companies seeking reliable electricity for artificial intelligence (AI) and cloud computing infrastructure.
Former coal plant offers new role in US energy supply
The proposed Indiana facility would use 12 Xe-100 reactors, each capable of generating 80 MW of electricity. The reactors would be arranged in three groups of four, providing a combined capacity of 960 MW.
Developed by X-energy, the Xe-100 is a high-temperature, gas-cooled reactor that uses helium as a coolant and a specialized nuclear fuel known as TRISO. Its design allows for smaller generating units than conventional large nuclear plants.
The location also reflects growing interest in reusing former coal power sites for nuclear generation.
Retired coal plants can offer advantages for developers, including access to transmission infrastructure, industrial land and communities with experience in power generation.
However, existing infrastructure does not remove the need for extensive site assessments, new equipment and regulatory approval.
For utilities, former coal sites could provide an opportunity to replace retired generating capacity while reducing the need for entirely new infrastructure.
Whether these locations offer a financial advantage will depend on site conditions, construction costs and grid connection requirements.
AEP and X-energy must evaluate these factors before deciding whether the Indiana project is technically and financially viable.
If completed, the facility could also create more than 1,000 construction jobs and more than 100 permanent positions, according to Amazon.
The development could provide new employment and tax revenue for Sullivan County, although these benefits depend on the project advancing to construction.
Data center growth drives demand for reliable nuclear power
Amazon’s investment comes as electricity demand from data centers rises across the US, driven partly by the expansion of AI services.
According to the International Energy Agency (IEA), global data center electricity consumption could reach approximately 945 terawatt-hours by 2030, more than double the level recorded in 2024.
The IEA also projects that data centers will account for nearly half of US electricity demand growth between 2024 and 2030.
This creates challenges for utilities already facing transmission constraints, aging infrastructure and the need for additional generating capacity.
Nuclear power is attracting interest because it can provide electricity around the clock without producing direct carbon emissions during generation.
For data center operators, this offers a potential source of long-term electricity supply while supporting emissions reduction targets.
However, new nuclear projects typically require longer development periods than data centers. According to the IEA, a data center can become operational within two to three years, while major energy infrastructure often requires much longer planning and construction periods.
This difference helps explain why technology companies are becoming more involved in financing electricity generation.
Amazon’s agreement with AEP and X-energy forms part of a broader partnership announced in 2024. The companies aim to support the deployment of more than 5 gigawatts of new nuclear generating capacity in the US by 2039.
The Indiana proposal would contribute to that target if it receives the necessary approvals and enters commercial operation.
The proposed financing arrangement is also significant. By providing development capital and committing to purchase electricity, Amazon could give developers greater certainty over future revenue.
Long-term purchase agreements can help utilities assess major energy investments by reducing uncertainty over whether customers will buy the electricity generated.
However, the financial terms of the Indiana project have not been disclosed, making it difficult to assess its commercial viability.
Reactor costs and approval timelines remain major tests
Despite growing corporate interest, small modular reactors have yet to demonstrate that they can be built and operated at competitive costs across a large commercial fleet.
SMRs use smaller generating units that developers hope to manufacture and deploy in greater numbers. Standardized designs could reduce construction costs and shorten delivery times compared with conventional large nuclear plants.
However, these savings remain largely unproven at commercial scale.
Developers must secure enough orders to support manufacturing, establish reliable supply chains and demonstrate that their reactors can meet construction schedules and operating requirements.
X-energy’s first planned commercial deployment is at Dow’s Seadrift manufacturing facility in Texas.
The proposed four-reactor plant would supply electricity and industrial steam to the site. Its construction permit application is undergoing review by the US Nuclear Regulatory Commission, and construction has not yet begun.
Progress in Texas will provide an important indication of whether X-energy can move its reactor design through licensing and into commercial operation.
The Indiana project faces similar obstacles, including site assessment, financing, regulatory approval and construction planning.
Time is another concern. Natural gas and renewable energy projects are also competing to meet growing industrial and data center electricity demand. Some can be developed more quickly than new nuclear facilities.
Although nuclear power could provide reliable, low-carbon electricity for decades, high initial costs and lengthy development periods remain significant barriers.
Amazon’s involvement may reduce some of the financial uncertainty by providing development funding and a potential long-term customer. However, the project’s final costs, financing arrangements and electricity prices have yet to be established.
The Indiana proposal therefore presents an important test for the energy industry.
Technology companies have the financial resources and electricity demand to support new nuclear development. Whether that support can make smaller reactors commercially viable will depend on developers securing regulatory approvals, controlling construction costs and delivering operating plants.
For now, Amazon’s latest agreement adds another proposed project to the growing US market for advanced nuclear power. Its economic value will become clearer as the project moves through feasibility studies and toward a final investment decision.
Source:
TechCrunch
