Digital Event Horizon
The US government has awarded contracts worth over $1 billion to Constellation Energy to supply nuclear power to over 13 federal agencies, marking a significant shift towards a more sustainable and reliable energy future. The deal will enable the federal agencies involved to become entirely carbon-free by 2030.
The US government has awarded contracts worth over $1 billion to Constellation Energy to supply nuclear power to over 13 federal agencies. Nuclear energy is seen as a reliable source of energy for datacenter operators, who are seeking to mitigate the growing electricity demand from their AI infrastructure. The deal marks a major breakthrough for Constellation Energy, which owns 21 nuclear reactors, and provides budgetary stability and protections from future price increases for federal agencies. The increasing demand for power from datacenters used to train and operate AI is expected to leave 40% of server farms with power constraints by 2027. Constellation Energy plans to invest $1 billion in its nuclear reactors over the next five years to supply 2.4 million megawatt-hours of new nuclear capacity.
In a move that marks a significant shift towards a more sustainable and reliable energy future, the US government has awarded contracts worth over $1 billion to Constellation Energy to supply nuclear power to over 13 federal agencies. This historic procurement is part of a broader trend towards increased adoption of nuclear energy by datacenter operators, who are seeking to mitigate the growing electricity demand from their AI infrastructure.
The deal, which was announced on January 3rd, 2025, marks a major breakthrough for Constellation Energy, the Baltimore-based operator that owns 21 nuclear reactors, more than any other US operator. The company's shares rose by over 6 percent following the news, bucking the trend of an otherwise downbeat S&P 500 index.
The federal agencies involved in the procurement include the General Services Administration (GSA), which will receive a fixed price for electricity over a 10-year period. This move is seen as a major victory for Constellation Energy, which had long advocated for increased adoption of nuclear energy by government agencies and private companies.
"This historic procurement locks in a cost-competitive, reliable supply of nuclear energy over a 10-year period, accelerating progress toward a carbon-free energy future while protecting taxpayers against future price hikes," said GSA Administrator Robin Carnahan. "The deal provides federal agencies with budgetary stability and protections from future price increases by keeping their electricity costs fixed for ten years, explicitly acknowledging the threat posed by the growing electricity demand from datacenters and their burgeoning AI infrastructure."
According to the Jack Kemp Foundation, a Washington, D.C.-based think tank, 70 percent of Americans could face price hikes in their electricity bills by 2030 if action is not taken to boost generation and transmission capacity. The increasing demand for power from datacenters used to train and operate AI has been identified as a major contributor to this trend.
In addition to the procurement announced on January 3rd, 2025, other datacenter operators have been showing interest in nuclear energy as a reliable source of energy. Microsoft, Oracle, and Amazon have all been mentioned as being involved in discussions about nuclear energy for datacenters.
However, despite the growing interest in nuclear power, there are still significant challenges to be addressed. Schneider Electric has warned that the best bet for datacenter operators is to opt for gas turbines in the short term with small nuclear reactors seen as more viable longer-term options.
A report published in November by Washington, D.C.-based think tank the Jack Kemp Foundation estimated that 160 percent of AI-fueled datacenter energy demand is forecast to swell over the next two years. This trend is expected to leave 40 percent of server farms with power constraints by 2027.
In an effort to address these challenges, companies like Constellation Energy are investing in new equipment and technology to increase output. The company intends to invest $1 billion in its nuclear reactors over the next five years, which will enable it to supply 2.4 million megawatt-hours of new nuclear capacity over the ten-year life of the contract.
The energy savings work included in the procurement also aims to reduce emissions at federal buildings located in Washington, D.C. The work includes installation of LED lighting, new and upgraded HVAC kits and building control equipment to improve energy efficiency and decrease emissions.
In addition to reducing greenhouse gas emissions, this deal is also seen as a major victory for Constellation Energy, which had long advocated for increased adoption of nuclear energy by government agencies and private companies.
"This historic procurement validates the company's efforts to secure its own atomic sources," said President and CEO Joe Dominguez. "Under this agreement, the United States government joins Microsoft and other entities to support continued investment in reliable nuclear energy that will allow Constellation to relicense and extend the lives of these critical assets."
The deal is also seen as a major breakthrough for the US government's efforts to reduce its reliance on fossil fuels and increase adoption of renewable energy sources. The federal agencies involved in the procurement include the GSA, which will receive a fixed price for electricity over a 10-year period.
This move is part of a broader trend towards increased adoption of nuclear energy by datacenter operators, who are seeking to mitigate the growing electricity demand from their AI infrastructure. In an effort to address these challenges, companies like Constellation Energy are investing in new equipment and technology to increase output.
Related Information:
https://go.theregister.com/feed/www.theregister.com/2025/01/03/us_gov_nuclear_energy/
Published: Fri Jan 3 13:20:38 2025 by llama3.2 3B Q4_K_M
