--:-- Ryan Knudsen: Welcome to The Journal, our show about money, business, and power. I'm Ryan Knudsen. It's Friday, October 4th.
--:-- Jennifer Hiller: I'm Jennifer Hiller, who covers energy. And people just became maybe more aware of the problems or more fearful of the potential downside. And kind of the upshot over a long period of time was that nuclear power plant construction in the U.S. really slowed down in the 80s and 90s. And we really aren't building plants today, and Three Mile Island is one of the reasons why.
--:-- Ryan Knudsen: After the accident, one of Three Mile Island's reactors actually kept running for 40 years. But in 2019, the plant closed, seemingly for good. But now, an unlikely suitor wants to reopen Three Mile Island, the tech giant Microsoft.
--:-- Ryan Knudsen: I think it's a wild story. It's something that really you wouldn't have seen coming. Microsoft is in search of so much power and so much clean power that it is willing to go to Three Mile Island, the site of our worst commercial nuclear accident in the U.S.
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--:-- Ryan Knudsen: Bad CRM was then. This is ServiceNow.
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--:-- Ryan Knudsen: You might think that U.S. electricity consumption has gone up over the past few decades, as we've used more and more devices. But for most of that time, that wasn't true. A more efficient grid and greener designs have kept electricity use relatively flat. But all that changed about two years ago, when there was a sudden surge in electricity demand, thanks in large part to a new technology.
--:-- Ryan Knudsen: I would say starting in late 2022 early 2023 everybody really started talking about generative AI. And generative AI uses a lot more power than a regular Google search. It requires a lot of energy. And the tech industry realized essentially that it was on the cusp of this new boom that it compares to sort of being the next Internet.
--:-- Ryan Knudsen: And, you know, something that's very important for the U.S. economy. They argue that it's important for global security and sort of the U.S. position in the world as well. So the tech industry started making really big strides in generative AI. Generative artificial intelligence, stuff like ChatGPT, requires a lot of energy. Asking ChatGPT a question can use up to 10 times more power than doing a Google search.
--:-- Ryan Knudsen: How much energy does one data center consume? It really varies. You can have smaller data centers that might be 10 or 20 megawatts. That would have been kind of a normal data center until not too long ago. But some of the newer data centers are consuming hundreds of megawatts.
--:-- Ryan Knudsen: How much is a megawatt? So a megawatt is roughly a big box retailer. And a megawatt is about what they're drawing at any given time. I see. Yeah, so a gigawatt, if you have a gigawatt... Is a thousand Walmarts. Yeah, that's a thousand Walmarts.
--:-- Ryan Knudsen: It's about like San Francisco. So you can have... Wait, San Francisco is a gigawatt, is a thousand Walmarts? Exactly. So wait, it's possible that some of these new data centers use up as much electricity as San Francisco as an entire city? Yes. Holy smokes! I'm not allowed to swear on this show, but wow, that is enormous.
--:-- Ryan Knudsen: Yeah, so you see the problem. This is a lot of power. And we have a lot of power in the U.S. We have a lot of times, most of the time, we have excess power because the system is sort of designed to have a lot of wiggle room. But, you know, we have new factories being built. We have chip factories. We have electric vehicles coming into the system, including big fleets that use a lot of power.
--:-- Ryan Knudsen: So there are other big new users of the grid, but there are lots of projects that are asking for many hundreds of megawatts. So it's complicated. Making things more complicated is the fact that these tech companies have set stringent climate goals, meaning that they don't want to power these data centers by buying carbon-heavy sources like natural gas and coal.
--:-- Ryan Knudsen: They want their power to be clean. Microsoft, a major investor in OpenAI, the company behind ChatGPT, has pledged not only to be carbon neutral by 2030, but carbon negative. Here's Microsoft CEO Satya Nadella in 2020. We must take responsibility to address the carbon footprint of our own technology and company, but we will also go beyond that.
--:-- Ryan Knudsen: By 2050, we will remove from the environment all of the carbon we have emitted directly or by electrical consumptions since our company's founding in 1975. But recent disclosures from the company show its climate metrics are moving in the wrong direction. Microsoft reported that its emissions were up 30% over the previous three years.
--:-- Ryan Knudsen: So Microsoft and the other tech companies have been making progress on their climate goals, but that has sort of reversed in the face of AI. And they're kind of backsliding a little bit because they're in this huge growth period and they're needing to use more electricity.
--:-- Ryan Knudsen: And they're also needing to build a lot of data centers and buy things like steel and concrete to build those data centers. And that's really being driven by this AI boom. Microsoft is already partially powering its data centers with clean energy generated from solar and wind farms.
--:-- Ryan Knudsen: But wind and solar don't provide constant energy. These data centers are online all the time. They basically are not flexible. They are using power 24-7. Right. People are asking chat GPT, you know, for a late night pizza recipe at 11 p.m. when the sun's not shining and it might not be windy out.
--:-- Ryan Knudsen: Exactly. And so if you're doing that kind of activity 24-7 and you're not a flexible resource on the grid, you're not able to maybe dial down your use the way that a household might be able to or that a manufacturing facility may be able to. You need to be on all the time.
--:-- Ryan Knudsen: That's why companies like Microsoft are more and more interested in nuclear energy. So the promise of nuclear energy is that it can deliver baseload power, so a very steady and reliable source of power 24-7, and that it can do it in a carbon way.
--:-- Ryan Knudsen: Basically the big stacks that you see at a nuclear power plant are releasing steam. So it's just water that gets released from a plant. There's no carbon dioxide. And so the promise of nuclear is that you can produce a lot of reliable, clean power.
--:-- Ryan Knudsen: But the concern about nuclear is that you have radioactive waste that we don't have a great solution for in the U.S. Currently, we just store everything on site under what are turning out to be very long-term arrangements.
--:-- Ryan Knudsen: And, you know, people have safety concerns around nuclear power. Is nuclear a more cost-effective source of energy? No, it's expensive. There's a lot of people who think it could be cheap or say that it's cheap when a whole bunch of other factors are considered.
--:-- Ryan Knudsen: But, you know, it's a more expensive kind of plant to operate. You need more people on site and they have higher regulatory costs. But there's a lot of advocates of nuclear power who would say that that expense is worth it when you look at the climate benefits and the reliability benefits.
--:-- Ryan Knudsen: And that we're going to have to pay for those one way or another. So you're going to need nuclear to be sort of part of the reliability and climate solution. But rebooting a power plant is a lot more complicated than a Microsoft Windows update. That's next.
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--:-- Ryan Knudsen: If you're a tech company that wants nuclear energy, there aren't a lot of great options for getting it. Building new plants is extremely expensive and time-consuming. There's new, smaller reactors that might be able to sit next to a data center, but that's still pretty far off from being scalable in the U.S.
--:-- Ryan Knudsen: So the quickest thing to do is reopen an old, decommissioned plant. Let's talk about Three Mile Island. Introduce us to this deal that just got announced. So this deal is between Microsoft and Constellation. Constellation Energy owns Three Mile Island.
--:-- Ryan Knudsen: And about 20 months ago, they started looking at what it would take technically to bring Three Mile Island back. So this deal is a power purchase agreement between Constellation and Microsoft. In the 20-year power deal, Constellation Energy will revive and run the undamaged reactor from Three Mile Island and sell that power to Microsoft.
--:-- Ryan Knudsen: So is Microsoft going to build a data center right near Three Mile Island and plug it in to the nuclear power plant? How does that work exactly? It's not going to be directly adjacent or receiving power directly from Three Mile Island, but they will have data centers in the region.
--:-- Ryan Knudsen: Okay, so it's sort of just like, we're going to pay to put this power into the grid, and then that'll sort of balance itself out as it moves around the networks in the U.S., sort of. Exactly. When you're pulling power from the grid, you never know exactly what you're using.
--:-- Ryan Knudsen: You can assume that you're using, you know, sort of the mix of whatever's on there, because electrons just flow. But, yeah, they will be paying for that clean power to be delivered. Microsoft's vice president of energy called the agreement, quote, a major milestone in Microsoft's efforts to help decarbonize the grid.
--:-- Ryan Knudsen: For Constellation, the deal is a huge win. The company's stock jumped 22% the day of the announcement. Here's Constellation's CEO talking about the new partnership at a conference last week. Nuclear energy is like peanut butter and jelly with the AI needs for power, right? We have facilities that likewise were always designed to run 24-7.
--:-- Ryan Knudsen: And so it's a good matchup. And Microsoft has been focused on that matching because they want to have energy that produced at the same time they use it. The company says it will take four years and cost $1 billion to reopen the plant. And it will change its name from Three Mile Island to the Crane Clean Energy Center.
--:-- Ryan Knudsen: Why is it going to take until 2028 to reopen this plant if it only shut down five years ago or so? Can't you just kind of go back in there and Homer Simpson flip the switches back on? Homer Simpson is the nuclear industry's favorite fictional character.
--:-- Ryan Knudsen: Nuclear it's pronounced nuclear i i imagine i suspect that the nuclear industry does not like homer simpson they they're not a fan the department of energy has pages even dedicated to uh busting simpson's myths like there's no green goo.
--:-- Ryan Knudsen: But um you were asking about what they mean like why is it going to take four years to turn this nuclear plant back on? Well, everything that you do at a nuclear power plant, you have to be, of course, really careful with. And you're going to have to go through the Nuclear Regulatory Commission, which is a pretty stringent regulatory body that oversees that industry.
--:-- Ryan Knudsen: What about the risk for the people that live around these nuclear power plants? So, like, for the people that live around Three Mile Island, is there a chance that, you know, there could be another Three Mile Island disaster? I mean, I don't know that you can ever eliminate all of the risk factors.
--:-- Ryan Knudsen: I think there's always going to be risk that something could go wrong. You know, people operate these plants. Human error is a thing. You can have mechanical or other failures at plants. But, you know, certainly we've had, we haven't had another Three Mile Island in the U.S. and a lot of people consider this to be a really safe form of power.
--:-- Ryan Knudsen: They've got a really stringent regulator that oversees them, often considered the most stringent regulator in the world. Is this the return of nuclear in the U.S.? Or is this just maybe a sort of stopgap solution for the tech industry as they transition to other technologies?
--:-- Ryan Knudsen: That's a really good question. And I think it's hard to say for certain. It's definitely something of a turnaround for the nuclear power industry. This is not the kind of project that we would have imagined, you know, even three years ago.
--:-- Ryan Knudsen: It would have been impossible to imagine that there was a customer willing to pay to bring a nuclear plant out of decommissioning. But I think in terms of, right, how much can this industry grow? So I think that's just a big question because wind and solar is being added so quickly.
--:-- Ryan Knudsen: You could have advances in battery technology. So I think there's a question about exactly how much market share nuclear will be able to take and how quickly they would be able to do that.
--:-- Ryan Knudsen: So what's your takeaway from this new arrangement of odd bedfellows, Microsoft and Three Mile Island? I think it just speaks to what the power demand is going to be and the lengths that people would be willing to go to secure that power.
--:-- Ryan Knudsen: The demand coming from the tech industry so far appears to be insatiable and that we're going to need more forms of power generation coming online in the coming years to be able to meet that. That's all for today. Friday, October 4th.
--:-- Ryan Knudsen: The Journal is a co-production of Spotify and The Wall Street Journal. The show is made by Catherine Brewer, Maria Byrne, Jonathan Davis, Pia Gaikari, Rachel Humphries, Matt Kwong, Kate Lymebaugh, Jessica Mendoza, Annie Minoff, Laura Morris, Enrique Perez de la Rosa, Sarah Platt Alan Rodriguez Espinosa Heather Rogers Pierce Singhi Jivika Verma Lisa Wang Catherine Whalen Tatiana Zamis and me, Ryan Knudsen with help from Trina Menino.
--:-- Ryan Knudsen: This is Maria's last week with us on The Journal Maria, you rock We're gonna miss you so much Our engineers are Griffin Tanner Nathan Singapak and Peter Leonard.
--:-- Ryan Knudsen: Our theme music is by So Wiley. Additional music this week from Catherine Anderson Peter Leonard, Billy Libby, Nathan Singapak, Griffin Tanner, So Wiley, and Blue Dot Sessions.
--:-- Ryan Knudsen: Fact-checking by Kate Gallagher and Najwa Jamal. Thanks for listening. See you Monday. Have you ever been to Three Mile Island? I have not. Me either. I have not heard great things. It's maybe not the biggest tourist destination.
