25/01/13
AI may boom on gas power, then turn to nuclear
AI may boom on gas power, then turn to nuclear
New York, 13 January (Argus) — The first tranche of new US data centers coming
on line this decade to run electricity-intensive artificial intelligence (AI)
software will probably rely mostly on power generated by natural gas, while the
nuclear renaissance hoped for by Big Tech comes later in the 2030s. Microsoft,
Amazon, Facebook-parent Meta and Google-parent Alphabet want clean, reliable
power as quickly as possible so they can be early movers in the development of
AI, which is rapidly advancing and finding new user bases around the world.
While these companies do not relish the optics of powering AI development with
fossil fuels, gas-fired power is widely expected to fulfill most of the gap
between current supply and future demand through at least 2030. Unlike wind and
solar, gas can be relied upon for steady, baseload power, a necessary ingredient
for always-on data centers. And crucially, unlike nuclear, gas-related
infrastructure can be built out quickly. The most recent additions to the US
nuclear fleet, Vogtle units 3 and 4 in Georgia, took 15 years to build and cost
$30bn, double the expected time and cost. A few decommissioned nuclear reactors
can be restarted, as Microsoft is paying to do with a unit of Three Mile Island
in Pennsylvania. But this low-hanging fruit will be quickly exhausted. Questions
around the meter While there is broad agreement that gas will power the AI data
center boom through at least 2030, questions remain about what this rapid
gas-fired power build-out will look like. Data center operators can secure power
in two ways: wade through the long, arduous interconnection process through
which new customers connect to the grid, or bypass the grid altogether and
secure their own personal electricity supply through so-called
"behind-the-meter" agreements. Many in the gas industry are betting tech
companies' need for speed will force them to opt for the latter. "The data
centers are not going to wait," Alan Armstrong, chief executive of Williams, the
largest US gas pipeline company, told Argus in an interview. "They are going to
go to states that allow you to go behind the meter." In this scenario,
construction of an AI data center in a state like Louisiana, for instance, might
accompany construction of a new intrastate pipeline connecting the state's
prolific Haynesville gas field with a new gas-fired power plant. Intrastate
pipelines bypass the federal oversight triggered by interstate pipeline
construction, and new gas power plants only take 2-3 years to build, East Daley
Analytics analyst Zachary Krause told Argus . Most of the incremental power
needed to run AI data centers this decade will be generated by new gas plants,
Krause said. Even ExxonMobil in December said it was in talks to provide "fully
islanded" gas-fired power to AI data centers. It claimed it could even capture
90pc of the CO2 emissions from power generation, appeasing tech companies'
climate ambitions. ExxonMobil's non-grid gas generation fleet is "independent of
utility timelines, so they can be installed at a pace that other alternatives —
including US nuclear — just can't match," ExxonMobil chief financial officer
Kathy Mikells said. But connecting to the grid may offer better reliability and
economics than behind-the-meter gas power. If an off-grid gas generator trips
off line, for instance, an always-on data center without back-up generation
depending on that facility would be in trouble. Grid connection also allows
generators to sell excess power into the grid. For those reasons, most new data
centers this decade will rely on the grid as their primary power source, Adam
Robinson, research associate at consultancy Enverus, told Argus . Small modular
future But if the 2020s become the decade of gas-powered AI, the 2030s may be
when nuclear-powered AI gets its due. The long-awaited nuclear renaissance may
come not from conventional reactors, but from next-generation small modular
reactors (SMRs), which can theoretically be built much faster and cheaper. No US
SMRs yet exist, but given the number of SMR start-ups with expected start dates
before 2030, and money pouring into the sector from the likes of Google and
Microsoft, at least one of these next-generation reactors should be operating by
2030, Adam Stein, director of nuclear energy innovation at research center
Breakthrough Institute, told Argus . SMRs' smaller price tag relative to
conventional 1 GW nuclear reactors may also accelerate their adoption, Stein
said. "Not every utility needs a GW-scale plant of any kind, but they might need
a 300 or 600MW plant," he said. "So the total addressable market is larger for
SMRs." By Julian Hast Send comments and request more information at
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