Amazon.com (AMZN.O) announced on Wednesday that it has entered into three agreements to develop small modular reactor (SMR) technology, joining a growing number of major tech companies exploring new energy sources to meet the increasing electricity demands of data centers.

As part of these agreements, Amazon will fund a feasibility study for an SMR project at a Northwest Energy site in Washington state, with X-Energy responsible for the reactor’s development. Financial terms of the deal were not disclosed.

Under this agreement, Amazon will have the option to purchase electricity generated by four SMR modules. Additionally, Energy Northwest, a consortium of public utilities in the state, will have the opportunity to add up to eight additional 80 MW modules, bringing the potential total capacity to 960 MW. This amount of power could supply electricity to over 770,000 U.S. homes, with the extra energy being accessible to both Amazon and local utilities to support residential and business needs.

“Our agreements will promote the development of new nuclear technologies that can provide energy for decades,” said Matt Garman, CEO of Amazon Web Services.

SMRs are designed to have their components manufactured in a factory setting, which aims to reduce overall construction costs compared to traditional larger reactors, which are built on-site. However, critics of SMRs argue that they may not achieve the necessary economies of scale to be cost-effective.

Nuclear power is favored for its ability to generate electricity with minimal greenhouse gas emissions and its capacity to create high-paying union jobs, earning bipartisan support among lawmakers.

Currently, there are no operational SMRs in the United States. NuScale Power (SMR.N) holds the only SMR design license from the U.S. Nuclear Regulatory Commission but faced setbacks last year when it had to cancel its first SMR project intended for a U.S. laboratory in Idaho.

Moreover, SMRs produce long-lasting radioactive waste, and the U.S. lacks a final repository for such material. Scott Burnell, a spokesperson for the U.S. NRC, stated that “no specifics” about the planned SMRs have yet been submitted to the regulatory body.

Rising Data Center Demand

This year, technology companies have signed numerous agreements with nuclear firms as artificial intelligence drives a surge in U.S. power demand not seen in decades. However, the timelines for nuclear projects often extend several years beyond initial goals.

 

According to Goldman Sachs estimates, U.S. data center power consumption is projected to triple from 2023 to 2030, necessitating approximately 47 gigawatts of new generation capacity. Goldman Sachs anticipates that natural gas, wind, and solar power will help meet this demand.

In addition to the SMR project in Washington, Amazon is leading a $500 million funding round to support X-Energy in its SMR development efforts. The goal is to have more than 5 gigawatts of SMR capacity operational in the United States by 2039, a target the companies claim is the largest commercial deployment of SMRs to date.

Amazon has also entered into an agreement with Dominion Energy (D.N) to explore developing an SMR project near one of Dominion’s existing power stations in Virginia. This approximately 300 MW project aims to address power needs in a region where demand is expected to increase by 85% over the next 15 years.

U.S. Senator Mark Warner, speaking at an event at Amazon’s Virginia offices, remarked that these recent developments could be key to successfully building SMRs in the U.S. He noted that he frequently speaks with international parties interested in purchasing SMRs from U.S. companies but are hesitant due to the lack of domestic projects.

Earlier this week, Alphabet’s Google (GOOGL.O) signed an agreement with Kairos Power to bring an SMR online by 2030, with plans for additional deployments through 2035. In March, Amazon acquired a nuclear-powered data center from Talen Energy (TLN.O), and last month, Microsoft (MSFT.O) partnered with Constellation Energy (CEG.O) on a power agreement to help revive a unit of the Three Mile Island plant in Pennsylvania, the site of the worst nuclear accident in U.S. history in 1979.