Amazon to fund 12 small nuclear reactors at former Indiana coal plant

Small modular nuclear reactors gain a major customer and funding boost, advancing their commercial viability.

Amazon has announced it will fund the development of a 960-megawatt nuclear power plant in Indiana, with utility company American Electric Power (AEP) set to operate it. The plant will feature 12 Xe-100 small modular reactors designed and supplied by X-energy, a company Amazon has significantly invested in. This project, slated for the site of a former coal plant near Terre Haute, marks Amazon's second commercial agreement with X-energy and is three times the size of their initial deal. Both companies aim to develop 5 gigawatts of new nuclear capacity in the U.S. by 2039. The power generated will serve Amazon's data centers and the public electric grid, though its realization hinges on X-energy's successful completion of its first project at a Dow Chemical plant in Texas, which is currently facing regulatory scrutiny. X-energy recently went public on the Nasdaq.

This deal signifies a significant endorsement for small modular reactors (SMRs), positioning them as a viable alternative to traditional large-scale nuclear power and a potential solution to the energy demands of data centers. Amazon's substantial investment and commitment to purchase power from X-energy's SMRs could accelerate the technology's development and deployment, potentially influencing other tech giants and utilities to explore similar partnerships. The success of this project, however, remains contingent on X-energy overcoming regulatory hurdles and demonstrating the reliability of its first SMR deployment, which could serve as a bellwether for the broader SMR industry.

The initiative highlights a growing trend of major corporations seeking to secure stable, low-carbon energy sources to power their energy-intensive operations, particularly AI and cloud computing. It also underscores the challenges and opportunities in the nascent SMR market, where companies are trying to overcome the cost and timeline overruns that plagued previous nuclear projects through mass manufacturing and modular design. The market's reaction to X-energy's stock performance, despite the Amazon deal, indicates investor caution regarding the long-term profitability and execution risk associated with this emerging technology.