AI's real bottleneck is electricity: households are already paying part of the nuclear deal costs

As artificial intelligence drives up the electricity demand of data centres, big technology companies are turning to nuclear power. But who will ultimately pay for that electricity is a question that extends far beyond Silicon Valley, this analysis says.

Within a week, two of the world's three largest cloud computing companies signed 20-year contracts for nuclear electricity. Amazon has taken 690 megawatts from Constellation's Calvert Cliffs plant in Maryland, including 190 megawatts of additional generating capacity expected between 2030 and 2032.

Google has signed an agreement that will bring 890 megawatts of additional nuclear capacity into the United States. Constellation is investing more than $4.3bn to upgrade 11 reactors across Illinois, Pennsylvania and New Jersey. Neither agreement, however, involves building a new reactor; instead, they are paying to generate more output from reactors that already exist.

A few years ago, such agreements would have seemed inconceivable. Nuclear power had fallen out of favour following accidents at Three Mile Island in 1979, Chornobyl in 1986 and Fukushima in 2011. Germany phased out nuclear power, while Japan shut down its reactors after Fukushima, although it has since begun restarting them.

Today, an undamaged reactor at Three Mile Island is being brought back into service, with Microsoft contracted to buy its output for 20 years. The US Department of Energy is providing up to $4.4bn in loans to support the restart of three shuttered plants, with the aim of restoring about 2.25 gigawatts.

Palisades in Michigan, which was closed in 2022, is contracted to be generating again by March 2027. If successful, it would become the first US commercial nuclear plant to restart after entering decommissioning.

In the last decade, the industry's answer to AI's energy problem was efficiency — better chips, smaller models and smarter cooling. Modern AI chips perform more computation per unit of electricity than their predecessors. Yet those gains did not reduce overall demand; each gain was quickly put towards something larger.

Even when DeepSeek demonstrated that a competitive model could be trained at a fraction of the expected computing cost, industry spending did not fall. Instead, laboratories continued planning more training runs, models that reason for longer, agents that work continuously in the background, and video generation.

The International Energy Agency estimates that global data centre electricity demand will more than double to around 945 terawatt-hours by 2030, even assuming continued improvements in efficiency.

Money, however, cannot solve every problem quickly. A new large reactor takes a decade or more from decision to electricity. Small modular reactor projects are not expected to deliver electricity until the early 2030s in many cases. So the faster option — restarts and upgrades — still means 2027, 2028, 2029 or beyond.

Most of these deals sit inside PJM, the grid operator serving roughly 67 million people across 13 American states and Washington, DC. PJM uses capacity auctions to secure generating resources for future demand, with the costs ultimately passed on to consumers through their electricity bills. Capacity prices have reached the regulatory price cap in three consecutive auctions.

According to the grid operator's independent market monitor, data centre demand contributed approximately $29.4bn in capacity costs across the four most recent auctions. In the latest auction alone, around $6.3bn was attributed to data centre demand, including forecasts for facilities that have yet to be built. The Natural Resources Defense Council estimates that, by 2028, the typical household within PJM could face an additional $70 per month in electricity costs if current trends continue.

In response, Virginia has established a separate electricity rate class for data centres, Ohio has introduced minimum billing requirements, and Illinois is debating legislation. The aim of the Google agreement is to tackle this objection — major new consumers should bring additional generation rather than compete for an already constrained supply. However, the arrangement remains voluntary; in October 2026, US federal regulators rejected most of PJM's proposal to require large new consumers to provide their own generation capacity.