## Nuclear Power: A Resurgence Fueled by Data Centers and Global Energy Needs
Nuclear power, once relegated to the sidelines as renewable energy sources gained prominence, is experiencing a significant resurgence. This shift is fueled by a confluence of factors, including the insatiable energy demands of data centers and growing global concerns about energy security.
Goldman Sachs analysts, led by Brian Singer, have identified a compelling trend: “Big Tech” companies are diversifying their energy sources, with a notable pivot towards nuclear power. This is driven by the explosive growth of data center power needs, which are projected to increase by a staggering 165% by 2030.
“We continue to see Big Tech taking an all-in approach to sourcing power and pursuing low-carbon solutions,” Singer stated. He added, “While we continue to assume renewables will meet only 40% of data center power demand growth through 2030, we see potential for a significant rise in nuclear’s share in the 2030s.”
The limitations of renewable energy sources like solar and wind, which require substantial land, are driving this shift. According to Singer, natural gas and nuclear require a much smaller land footprint compared to utility-scale solar.
## Small Modular Reactors (SMRs) Lead the Nuclear Renaissance
The emergence of Small Modular Reactors (SMRs) is playing a key role in this nuclear revival. SMRs are smaller, more compact, and more versatile than traditional reactors, making them an ideal solution for powering data centers and other energy-intensive facilities.
Hyperscale cloud providers, including Google, Amazon, and Microsoft, have already secured multiple contracts for SMR technology, underscoring their commitment to a low-carbon, reliable energy future.
“The prospects of more localized, onsite low-carbon reliable power has led to a surge in contracting by hyperscalers to support the development of small modular nuclear reactors,” the analysts wrote.
## Beyond SMRs: Traditional Nuclear Plants Make a Comeback
The resurgence of nuclear power isn’t limited to SMRs. Traditional large-scale nuclear projects are also gaining momentum. Constellation Energy Corp. recently announced plans to bring back online a dormant unit at the Three Mile Island plant, powered by a “take-or-pay” power contract with Microsoft.
According to the Goldman Sachs report, this could be just the tip of the iceberg, with “potential for approximately two additional plants to be brought online in the U.S.” over the coming years.
“Recognition of accelerated power demand growth from utilities is leading to greater willingness to consider new large-scale reactors,” said Singer.
## Governments Embracing Nuclear Energy
The policy landscape surrounding nuclear energy is also evolving. Governments worldwide are recognizing the need for stable and sustainable energy sources, leading to a renewed embrace of nuclear power.
“We’re seeing greater support by governments across the globe,” said Singer. “Switzerland is reconsidering nuclear, there’s bipartisan support in the U.S., and even Australia’s opposition party has proposed integrating nuclear into the country’s energy mix.”
At COP28, a global agreement was reached to triple nuclear capacity by 2050, signifying a significant shift in the global perception of nuclear energy.
## Challenges and Opportunities in Uranium Sourcing
While the nuclear revival presents a compelling opportunity, there are challenges to overcome. Uranium sourcing remains a complex issue, with nearly half of the global supply controlled by China, Russia, and Kazakhstan.
Europe and the Americas hold a significant portion of conversion and enrichment capacity, but rely on foreign uranium sources.
“We expect greater clarity on rules and confidence surrounding uranium sourcing will be key to moving forward with a meaningful ramp-up in nuclear generation capacity in the U.S. and Europe,” Singer explained.
## Cameco Corporation: A Key Beneficiary
Among the companies poised to benefit from the nuclear renaissance, Cameco Corporation stands out. Goldman Sachs highlights Cameco’s comprehensive operations, spanning mining, conversion, enrichment, and fuel fabrication, positioning the company to capitalize on both traditional and emerging nuclear applications.
The investment bank holds a ‘Buy’ rating on Cameco stock, with a 12-month price target of $61, representing a 20% upside potential from current market levels.
As the global energy landscape shifts towards a more sustainable future, nuclear power is poised to play a critical role. The combination of growing data center needs, government support, and the development of innovative technologies like SMRs is creating a perfect storm for the nuclear renaissance.
