White House Chronicle

News Analysis With a Sense of Humor

Big Tech Needs to Step Up and Take the Risk on New Nuclear Plants

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If it gets too hot or too cold for long next year or sometime in the next several years, you may find yourself in the dark, without air conditioning or heat, depending on the nature of the crisis. The electricity system is under stress — more so in some areas than others.

The electricity demand is rising rapidly. Onshoring of manufacturing, EVs (both private and commercial), and, most important, data centers serving the demand for AI are all staking their claim to more electricity.

AI gets most of the attention, and deservedly so. Data centers, essential to AI, are appearing everywhere, with a profusion in Virginia, Texas and California.

There is a critical need for more generation, and there is a general agreement that it should be provided, at least in part, by nuclear power. Seldom does an industry executive or a political figure talk about the electricity shortfall than they mention nuclear power and small modular reactors as a solution.

The big tech companies — think Amazon, Google, Facebook, Microsoft — are aware they may have to play a significant role in the future of the electricity supply, but they are selective.

The electricity-hungry tech giants — those building or have contracted to build data centers — are picky about the electricity they want.

The tech giants are keen to signal virtue. They want to be seen as using only carbon-free power, which means abundant and reliable natural gas isn’t an option for them.

They are buying all the wind and solar generation that is available. But for the great new additions that are going to be needed to support the exploding number of data centers and the nearly insatiable needs of AI, nuclear has to be the answer.

Despite the considerable attention given to Microsoft’s planned restart of Three Mile Island Unit 1, the tech giants have yet to really step up.

James Schaefer, senior managing director of Guggenheim Securities Investment Banking, thinks with their vast wealth and great electricity hunger, they should be leading the deployment of mall modular reactors and providing a path to the future. If not, there will have to be government-guaranteed insurance for the cost overruns that construction will likely face for the early generations of these reactors.

The solution is for the big tech companies to sign agreements with the developers to buy their power at generous and, maybe, flexible rates. In other words, they need to take the risk to bring their wealth to bear; otherwise, the risk will have to be taken by the government, which is unlikely to be favored in a conservative administration.

New nuclear plants face two problems: the risk of building the first-of-a-kind, always high, and the fact that the nuclear construction industry in America has been allowed to run down.

This was apparent with the delays and runaway costs experienced by the Southern Company when it added two old-style, big reactors at its Plant Vogtle near Waynesboro, Georgia. The costs and delays were wildly underestimated for the first unit, and the contractor, Westinghouse, went bankrupt during construction. The costs for the second unit also ran over its estimates, but less so than the first. Lessons had been learned, workers trained.

Schaefer believes the electric utility industry, acting in unison, needs to agree with the tech giants on how to provide a serious path to bring these exciting new reactor designs to market.

If the tech companies don’t shoulder a large part of the risk in new nuclear generation, that risk will fall on the industry and its customers and will be reflected in higher electricity rates when inflation has already taken a toll on household income.

Without a new path forward, the state commissions, which regulate electricity pricing, will be fighting for rates to remain low, well aware that inflation has already eaten into family budgets and a rise in the cost of electricity will have political consequences.

The can-do attitude of the incoming Trump administration will be seriously tested in the electricity field. It won’t want people sweating or shivering, and it may have to nudge tech biggies into doing more than peripheral things — and looking green — to provide for a demand they are creating.

How NIMBYism Is Strangling America

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Like fog, it creeps in, but unlike fog, it doesn’t dissipate. It gets denser and does untold damage to the economy and Americans’ lives.

It is that modern plague, known as much by its acronym as by its phrase: NIMBY, “not in my backyard.” It is the mantra of everyone who wants wherever they are to remain as it is — in perpetuity.

It is, in part, behind the crisis in electricity transmission, the lack of much-needed natural gas and oil pipelines, unbuilt but needed highways, and is a player in environmental injustice.

NIMBYism has also contributed to the housing crisis. It makes it so hard to build anything that disturbs the serenity of those who live in leafy suburbs with manicured lawns, and, perhaps, designer dogs. Yes, people like me — even though I can’t afford one of those homes or dogs.

If you are living the American Dream — two cars, swell house, well-tended garden — you are almost certainly a passive NIMBY contributor.

Active NIMBYs, abetted by the local ordinances that make life pleasant for the urban and suburban elites, fear that new housing will bring things they abhor: traffic, crowding, pollution and people of a different social class.

Desperately needed apartments and even mother-in-law houses or extensions are denied, contributing substantially to the national housing crisis.

It is easy to identify the effect of NIMBYism in housing. Still, it is at work countrywide, restricting, redirecting and forcing the abandonment of projects.

Power lines aren’t constructed, natural gas isn’t moved, road plans are abandoned, and unwanted facilities like prisons, factories and slaughterhouses are inflicted on poor areas, often rural, where the locals are bribed with job promises or don’t have the sophistication or resources to turn up opposition with media, litigation and political influence.

In Rhode Island, in the last several years, I have seen opposition mounted against a fish farm, offshore windmills, a medical waste disposal facility and various housing developments. “Put it somewhere else” is the collective cry.

So, the medical waste facility will go to an area where residents are less likely to object, not where it is needed, adding transportation costs; the power will be generated somewhere else, or there will be a shortfall; and Rhode Islanders, under a modified plan, may eventually get oysters farmed in the Sakonnet River.

The distorting effects of NIMBYism aren’t just an American burden. In Europe, they are as bad or worse.

For a long time, the Economist has been writing about how hidebound Britain has become by the prevalence of a culture of “don’t change anything.” The magazine has often pointed out that Britain has become a place where it is impossible to get anything done.

I can attest to that. A family member lived in a not very impressive — actually ugly — apartment block, built in the 1930s, near London.

As was done at that time to save money, all the water and sewer pipes were external, running along the walls on the outside. I mention the pipes only to point out that this building wasn’t lovely or a significant piece of English architecture. It was just a utilitarian block of flats. 

Yet, local ordinances designed to preserve the historic and beautiful buildings prohibited the residents from replacing old, leaky, wood-framed windows with modern, metal-framed ones. Preservation run amok is stultifying.

Not every project — either big, like a power plant, or small, like an apartment adjoining a house for an aging relative — is right for a community. But when local selfishness transcends a national need, some revision is needed.

Certainly, industrial companies, real estate developers and utilities shouldn’t be entitled to overrule local people axiomatically. Still, when the national interest is held hostage to local preference, there is a problem.

Take the long-planned and abandoned after completion nuclear waste storage site in Yucca Mountain, Nevada. It was abandoned because of well-orchestrated opposition. Result: nuclear waste is now temporarily stored above ground, near where it is created — as much a product of NIMBYism as the housing shortage.

The British have another acronym for what happened to Yucca Mountain: DADA, “decide, announce, defend, abandon.”