US startups fire up small reactors as AI data centers scramble for round-the-clock power

A cluster of American nuclear startups is racing to bring small reactors online as the biggest technology companies run out of reliable power for their artificial intelligence data centers. The reactors involved, generally capable of generating up to about 300 megawatts each, are designed to be built faster and sited closer to demand than the large conventional plants that have defined the nuclear industry for decades, and a growing list of them are now moving from paperwork into poured concrete.

Why Data Centers Are Turning to Nuclear at All

A single hyperscale AI computing campus under construction in 2026 can draw one to two gigawatts of power continuously, a load comparable to a mid-sized city and far beyond what many regional electric grids can comfortably absorb on short notice. Global data center electricity demand is projected to roughly double by 2027, with AI workloads driving the majority of that growth, according to industry estimates cited across recent energy trade coverage. Traditional grid expansion, new transmission lines, substations, and generation capacity, typically takes years to permit and build, which has pushed technology companies toward power sources they can contract for directly and, in some cases, site on or near their own campuses.

What Makes a Reactor “Small” and “Modular”

The U.S. Department of Energy’s Office of Nuclear Energy defines small modular reactors as advanced designs generating up to roughly 300 megawatts of electricity per unit, compared with 1,000 megawatts or more for a typical large conventional reactor. The “modular” part of the name refers to how many of these designs are meant to be fabricated largely in a factory and shipped to a site in prebuilt sections, rather than constructed almost entirely on-site the way conventional reactors are, a shift the Energy Department says can shorten construction timelines and make costs more predictable. Smaller output also means a single reactor can, in principle, be sized and sited to match a specific customer’s load, such as a single data center campus, rather than requiring the enormous transmission infrastructure a full-scale nuclear plant depends on to distribute power across a wide region.

The Companies Leading the Buildout

A handful of developers, including Oklo, X-energy, Kairos Power, TerraPower, NuScale, Rolls-Royce SMR, and Holtec, account for most of the SMR projects currently advancing toward construction in the United States, each pursuing a different reactor design, from conventional light-water technology to newer molten-salt and high-temperature gas-cooled concepts. Google signed what was described as the first corporate agreement of its kind with Kairos Power in 2025, targeting 500 megawatts of small-reactor capacity by 2030, and other hyperscale technology companies have since pursued similar offtake arrangements, in which a customer commits to purchasing a reactor’s output for years in advance to help the developer secure financing for construction.

Financing Reactors Through Guaranteed Buyers

Nuclear projects have historically struggled to attract private financing because of their high upfront capital costs and multiyear construction timelines, both of which make lenders nervous compared with financing a natural gas plant or a solar farm. Long-term power purchase commitments from technology companies with substantial balance sheets change that calculation considerably, giving SMR developers a guaranteed revenue stream to point to when raising construction capital. Trade press coverage of the sector has described the pace of these offtake deals as unusual by historical standards, with major technology companies signing more nuclear power agreements over roughly the past eighteen months than the broader U.S. utility industry signed over the prior two decades.

The Regulatory and Construction Timeline Ahead

Even with financing secured, small modular reactors still have to clear licensing review from the Nuclear Regulatory Commission, a process that examines reactor design safety, site selection, and emergency planning before construction can begin in earnest. Developers and analysts generally cite construction timelines of three to five years for a small modular reactor once a design is licensed and a site is approved, shorter than the seven to ten years typically associated with a large conventional plant, but still long enough that the AI data centers driving demand today are unlikely to see reactor-supplied power for several more years. In the meantime, several developers are pursuing early site permits and first-of-a-kind construction simultaneously with later licensing steps for follow-on units, an approach meant to compress the overall timeline between a signed offtake agreement and an operating reactor.

A Cautionary Precedent From NuScale’s Cancelled Project

The industry’s enthusiasm today follows a setback that still shapes how developers pitch their projects to potential customers. NuScale Power, the first company to receive NRC design certification for a small modular reactor, spent years developing a planned six-module plant in Idaho for a group of Utah utilities before the project was cancelled in November 2023 after construction cost estimates climbed well beyond original projections and too few utilities signed on to buy the power. The cancellation became a widely cited example of how first-of-a-kind nuclear construction can still run over budget even with a factory-built, modular design intended to avoid the cost overruns that have plagued large conventional reactors, and it is part of why today’s SMR developers have leaned so heavily on locking in long-term offtake agreements with financially strong technology companies before breaking ground, rather than relying on a broader group of utility customers the way NuScale’s Idaho project did.

Congress Moves to Speed Up Advanced Reactor Reviews

Lawmakers have also acted to address one of the industry’s longest-standing complaints, that NRC licensing timelines were built around large conventional reactors and poorly suited to newer, smaller designs. The Accelerating Deployment of Versatile, Advanced Nuclear for Clean Energy Act, signed into law in 2024, directed the NRC to modernize its licensing framework specifically for advanced and small modular reactors, set new timeliness goals for reviewing applications, and reduce certain licensing fees for first-of-a-kind designs. Industry groups have pointed to that legislation as a meaningful factor in the current wave of SMR construction announcements, arguing that a faster, more predictable regulatory path makes it easier for developers to commit to firm construction schedules when negotiating power agreements with data center operators.

This article was produced with the assistance of AI and reviewed by Morning Overview editors.

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