Chamber 🏰 of Tech Secrets #42
☢️ Energy Revolution
The Chamber 🏰 of Tech Secrets is open! In this post, we’ll look at an “emerging technology” that is not new at all, but rather re-emerging. That would be Nuclear Energy.
The Surging Demand for Electricity
Technologies like cloud computing, AI, and Electric Vehicles are driving increased demand for energy… electricity in particular. While residential energy usage is and has been experiencing marginal growth over time, the demands of these new and emerging technologies are challenging our capacity outlook, and sometimes current capacity. Add a potential comeback of American manufacturing (driven by attempts to decouple from China and/or tariff policies) and increased humanoid robotics or automation and we could see even larger increases in demand in the near future.
Cloud and Data Center energy usage — driven by AI — is on the rise, reaching 4.4% of total US energy consumed in 2024 (176 TWh). If current trends continue, this could reach upwards of 12% of current total energy capacity by 2028.
The Competitive Landscape
For the United States to remain competitive on the global stage (cost of goods, technological innovation, application of technology to more verticals), it will be extremely important to have competitive energy prices in the US.
Based on a fairly recent International Monetary Fund (IMF) paper, my assistant was able to put together the following chart showing electricity cost per Kilowatt hour by country, backing out government subsidies as best as possible since the goal here is to explore the real costs.
As you can see, China currently has the lowest energy cost per kilowatt hour and is poised to dramatically improve that position in the coming years with twenty nine nuclear reactors currently under construction, as of January 2025.
Electricity in the US currently costs nearly double that of China, even before these new reactors come online.
Why does this matter?
As we inferred above, electricity is a key component of many of the emerging technologies that are predicted to dominate the future. A cursory look at most “what to watch in 2025” lists will point you to the continued AI revolution (electricity), Electric Vehicles (charged with more electricity), humanoid and other robotics (running off electricity or batteries charged by electricity), cryptocurrency or stable coins (common complaint is they use too much… electricity), automated manufacturing (electricity), and of course “computing everywhere in everything” (electricity).
The Historical Fall of Nuclear
Nuclear power currently is rapidly emerging as a “no-brainer”… but it’s hardly a new technology. How did we get here?
Once seen as the energy of the future, nuclear power fell out of favor over the years due to a mix of safety concerns, high-profile reactor accidents, political shifts, and a general public apprehension. The most familiar incidents—Three Mile Island, Chernobyl, and Fukushima Daiichi—were significant in shaping public perception. These accidents, coupled with the challenges of high construction costs, extreme regulatory complexities, long-lasting waste management concerns, and NIMBYism (Not In My Back Yard), led many countries to pause or scale back their nuclear ambitions, including the United States.
These high-profile incidents occurred with older-generation reactors, specifically Generation II designs, which, while incorporating certain safety improvements, lacked the advanced features seen in more modern designs. Here is a recap of those narrative-changing events over a ~30 year period.
Three Mile Island (1979, USA): A partial meltdown occurred due to mechanical failures and operator error, leading to the release of a small amount of radioactive gas. Although contained, this event sparked widespread fear and led to major regulatory reforms in the U.S. nuclear industry.
Chernobyl (1986, USSR): This catastrophic explosion was caused by a combination of flawed reactor design and inadequate safety protocols, resulting in the most severe nuclear disaster in history. Chernobyl released a massive amount of radioactive material into the environment, affecting large parts of Europe and heightening global fear of nuclear energy.
Fukushima Daiichi (2011, Japan): Triggered by an earthquake and tsunami, this incident led to multiple reactor meltdowns and released significant radioactive material. It exposed vulnerabilities in nuclear plant designs for natural disasters and prompted a worldwide reevaluation of nuclear safety standards. Many countries begun discussing plans to deactivate reactors and move to different energy sources after this incident.
These incidents underscored the potential risks of nuclear power and led many countries to prioritize renewable sources or rely more heavily on natural gas and other fossil fuels. Some countries stopped new nuclear projects, while others shut their existing reactors down systematically (see Germany).
Recent Resurgence
Very recently, nuclear energy has started to make a resurgence. As we mentioned, China has embraced nuclear technology and has 29 nuclear reactors under construction currently. This may lower their cost per kilowatt hour to as low as $0.0165 USD when the projects are complete.
Two new GenIII+ nuclear reactors were put into service at Plant Vogtle in Georgia in 2023 and represent the first new nuclear energy generation in the US since 2016 when the Watts-Bar GenII reactor came online in Tennessee. Currently, there are no other projects that have started construction. There are a lot of plans, though.
As of Jan 3, 2025, three advanced reactor developers are working towards submitting construction permits. From the US Department of Energy:
TerraPower plans to build its sodium-cooled fast reactor and molten salt energy storage system near a retiring coal plant in Wyoming.
X-energy plans to build a four-unit, high-temperature gas reactor plant at Dow’s Seadrift manufacturing site in Texas.
Tennessee Valley Authority (TVA) also plans to submit a construction permit application by late summer 2024.
New Developments: Gen IV Reactors
A big part of the resurgence of nuclear is the modern reactors. China just placed the first operational Gen IV reactor into commercial service in late 2023 and many refer to these as “meltdown proof".
Gen IV reactors rely on natural physical laws (like gravity or convection) for cooling and shutdown, reducing the need for human intervention or complex mechanical systems. Many designs are "walk-away safe," meaning they can safely shut down without human action even in the event of a total power loss. Some of the designs, such as MSRs, use coolants that operate at lower pressure, minimizing the risk of catastrophic failure or core meltdown.
Some designs, like fast reactors, can "burn" nuclear waste from earlier reactors as fuel, reducing the amount and longevity of radioactive waste. This also results in a shorter half-life for the waste byproducts, meaning less need for long-term waste storage.
Another interesting concept in Gen IV designs is “Breeder Reactors” which can produce more fuel than they consume.
Unlike traditional reactors that use water, Gen IV reactors employ coolants like Helium, liquid metals, or molten salts. These coolants allow operation at higher temperatures and lower pressures, improving safety and efficiency.
There are six designs that are considered to be under the umbrella of Gen IV reactors:
Sodium-Cooled Fast Reactors (SFRs): Use liquid sodium as a coolant, operate at high temperatures, and can recycle nuclear waste.
Molten Salt Reactors (MSRs): Use molten salt as both a coolant and a medium for fuel, offering exceptional safety and fuel flexibility.
Gas-Cooled Fast Reactors (GFRs): Use helium as a coolant, allowing very high-temperature operation.
Lead-Cooled Fast Reactors (LFRs): Use liquid lead for cooling, offering high safety and efficiency.
Very High-Temperature Reactors (VHTRs): Designed for hydrogen production and industrial heat applications
Supercritical-water-cooled Reactor (SCWR): Uses supercritical water as both coolant and working fluid to achieve higher thermal efficiency, simpler design, and reduced waste, while operating at extremely high temperatures and pressures. Supercritical water is water that is heated above its critical temperature (374°C or 705°F) and critical pressure (22.1 MPa or 3,212 psi), at which it exists in a unique state that is neither a distinct liquid nor gas but exhibits properties of both.
And I thought software people loved acronyms…
Small Module Reactors (SMRs)
Of particular note are Small Modular Reactors (SMRs). SMRs are generally smaller in size and capacity (see photo from Oklo below), producing 10-300 MWe per unit as opposed to traditional reactors that product 1,000 MWe, or more (for the math averse, that’s 10-30% of the output).
As the name implies these reactors are also modular, which enables off-site construction and transportation to the installation site. In theory, this will keep standard designs (easier approval) and allow modular scale-up in the future with as demand grows in a given area, and all at a more manageable cost. This is in contrast to previous reactors, which are effectively snowflakes ❄️ due to unique considerations at each site.
There are several companies developing SMRs including and Kairos Energy, NuScale Power ($SMR), X-Energy, and Oklo ($OKLO).
Since many technology readers will be familiar with Sam Altman of OpenAI, I’ll mention his investment in Oklo, a company working on an SMR project called the Aurora Powerhouse (pictured above).
The Aurora is a compact, liquid-metal-cooled fast reactor designed to generate between 15 to 50 megawatts of electrical power. Notably, it can operate for up to a decade before requiring refueling, enhancing its reliability and reducing operational costs. The Aurora utilizes advanced fuel recycling technologies, allowing it to use nuclear waste as fuel, thereby addressing waste management challenges. The first commercial reactor is planned at the Idaho National Laboratory, beginning operation in or by 2027.
Big Tech Plans
Big Tech companies see where the puck is headed and are already skating there.
In September 2024, Microsoft entered a 20-year agreement with Constellation Energy (CEG) to purchase power from the planned reopening of the Three Mile Island Unit 1 reactor in Pennsylvania. This initiative aims to supply Microsoft's data centers with carbon-free nuclear energy.
Google's agreement with Kairos Power involves developing multiple small modular reactors (SMRs) to supply clean electricity to its data centers. The first reactor is expected to be operational by 2030, with additional deployments through 2035, collectively providing up to 500 megawatts of electricity. These reactors will be located in relevant service areas to supply clean electricity to Google data centers.
Amazon is investing in X-energy, a company specializing in high-temperature gas-cooled reactors (HTGRs). These reactors use helium as a coolant and are designed for enhanced safety and efficiency. Amazon's plans include developing SMRs to power its data centers, aiming to meet its sustainability goals.
Wrap up and hypothesis
As we have observed, the next wave of innovation and human progress is tightly coupled to electricity. While other approaches may develop (solar panels in space directed to earth, maybe?), the best and least intrusive solution that we can currently scale is nuclear power. I suppose the contrarian take is that renewables should be the answer, but I struggle to see it.
My hypothesis is that we see a resurgence of nuclear projects in 2025 (already proving true) and a large build out of SMRs that are in ubiquitous operation across the US by 2035. Investment dollars are and will continue to flow into companies developing these projects. The big questions are, will the regulatory landscape cooperate and how long will it take? Will there be major setbacks that destroy confidence in these new reactors, despite their enticing promises?
I am bullish on the companies that are building the next generation of nuclear reactors and excited about the positive benefits of low-cost electricity for the US (and global) economy. Like we said at the start: energy is one of the key components of producing things and the cheaper we can get it, the better. Driving the marginal cost of energy down will benefit everyone and create a better world for all of us. It is one of the keys to entering another “golden age”.
And if you end up with a Gen IV SMR reactor down the road from your house, you might not even care. Or know.
This post took a lot of time to research and write. I had to cut a lot of details and it’s likely imperfect on those I did include, but I hope it helped you learn something new or sent you searching for more information about something. Let me know what you thought of it.
Quality content. Learned something new, I appreciate the research! Added OKLO to my watchlist!
Too bad solar couldn't fully take over. But the efficiency, cost, hopefully "enhanced safety" of Nuclear 2.0 proves true.
Solar powered Humanoids operating the Nuclear plants to reduce the human error that played a role in Chernobyl and Three Mile Island. And "Meltdown Proof" plants to help with incidences like Fukushima of Natural Disaster. Maybe the missing recipes to make it successful are now in place.
Fantastic post. Outside of the awesome knowledge from reading this, my biggest takeaway is
CEG = 78.94B market cap
OKLO = 3.33B market cap.
Hmmmmm!!!!! (a pull back to it's 52-low of 5.35 and i'm in!
https://www.wsj.com/articles/fossil-fuels-toby-rice-eqt-pipeline-natural-gas-lng-emissions-reduction-climate-change-warren-granholm-energy-prices-white-house-council-environmental-quality-11650634990
“Giving people access to cheap, affordable, clean energy is the key to skyrocketing the quality of life,” he says. “There’s a very clear correlation: The more energy people use, the better the quality of life.” And that’s true everywhere in the world: “There’s three billion people around the world that have less electricity than it takes to run a fridge.”