What will power the grid in 2035? The race is wide open
The search for new energy sources has become a pressing concern for tech companies, driven by the insatiable demand for power from artificial intelligence. This has led to a surge in investment and competition in fusion and fission startups. While natural gas has been a reliable and inexpensive option for baseload power, its supply chain has been exposed as vulnerable after the war in the Middle East disrupted infrastructure in Qatar. The waitlist for gas turbines has grown so long that today's orders may not be fulfilled until the early 2030s, posing a risk not only to tech companies but also to the natural gas industry itself.
In the United States, 40% of natural gas consumed today is used to generate electricity. By the time turbine shortages relent, the industry could be flooded with new competitors. Small modular nuclear reactor (SMR) startups and fusion power startups are planning to connect their first commercial power plants to the grid in the next five to seven years, a timeframe similar to that required to get parts for a new natural gas power plant.
SMR startups have a promising chance of displacing natural gas power plants. These companies are tweaking existing fission reactor designs, leveraging proven fundamental physics that has been widely used for decades. Several SMR companies aim to have reactors operational before the decade ends. Kairos Power, for instance, has received approval for its Hermes 2 demonstration reactor and construction is underway. Oklo is targeting 2028 for its first commercial operations, while X-energy and TerraPower are aiming for the early 2030s.
The success of SMRs will depend on their ability to scale quickly and realize economies of scale. Tech companies are investing in these startups or signing agreements with them for gigawatts worth of power, demonstrating their confidence in these new energy sources.
The emergence of small modular nuclear reactors and fusion power startups poses a significant threat to natural gas as the dominant generating source. As tech companies invest heavily in these alternatives, it's clear that the industry is shifting towards cleaner and more sustainable energy options. The coming years will be crucial in determining which of these technologies will ultimately power the grid in 2035.
