President Trump’s dramatic executive orders on nuclear energy this week underscore the link between energy needs and the AI and data center boom. See Colin Fenton’s coverage of the executive orders (link HERE) and today’s webinar on nuclear/uranium with Sachem Cove’s Michael Alkin (replay HERE).
The US developments make this a useful time to briefly look at the dynamics in China: How is AI/data center boom impacting the outlook for nuclear in China’s fuel mix? While data center needs strengthen an already very positive outlook for nuclear in China, the incremental pickup in nuclear investment will be less dramatic than in the US, for the reasons discussed below.
First, China’s nuclear buildout already has significant momentum, but as part of a broader, diversified energy mix. Energy shortages are less of a near-term concern in China than some other major economies; electricity prices have been largely flat since 2023, though AI/data centers will drive demand in future years. China’s investments in nuclear slowed after Japan’s Fukushima disaster in 2011 but in recent years have picked up again: Beijing’s main goals with the nuclear buildout are to advance a critical technology and to achieve decarbonization. China currently ranks second globally in nuclear power generation (after the US) and is investing more than any country. The country has been adding about 10 reactors per year in recent years and is likely to maintain this pace for the next decade.
Even with this aggressive expansion, nuclear energy will likely account for less than 10% of China’s electricity generation by 2030 (vs. 4.7% in 2024). With China investing massive amounts in wind and solar power, nuclear energy’s main role will be as a partial replacement for coal as a reliable base fuel that does not suffer from the intermittency problems of renewables. Coal-fired power plants are a major pollution/emissions problem but also a powerful incumbent given China’s ample domestic coal supplies and cheap cost.
Second, China’s strategy to power data centers focuses on renewables, despite some flaws that nuclear could help address. In 2020, China launched a national initiative (“East Data, West Compute”) to build out data centers in the (poorer) western part of the country, where renewable resources are plentiful. The initiative is hitting some hurdles:
- Renewables are an unstable source of power. Nuclear could help but Beijing’s most direct solution for this is to deploy more battery storage to back up renewable power, which also helps address significant overcapacity already present in the battery sector.
- There is now overcapacity in data centers in the poorer Western regions, which lack the technical skills and usage of the coastal provinces. Tech firms are ambivalent about moving out west. Remote data centers in the west work well for training AI models, but as the focus shifts to inference it is more important to be close to the end-users on the coast.
These shortcomings strengthen the case for nuclear, especially in coastal provinces, where coal provides 70% of the power for data centers (per IEA). But nuclear also faces political opposition in these wealthier areas, with protests preventing some conventional plants from being built. Small modular reactors (SMRs) could be a game-changer here, though the outlook for deploying them at scale remains uncertain. Until then, nuclear will vie with coal and renewables to power data centers. The IEA’s April report on energy and AI (link HERE) includes the following China-specific projections:
- Between 2024 and 2030 coal remains the largest source of additional electricity for data centers, with annual generation increasing by nearly 90 TWh.
- Renewables, mostly solar PV and wind, add nearly 90 TWh over the same period, supported by an increase in the share of renewables in the grid electricity mix, provincial co-location mandates and policies to prioritize the construction of data centers in renewables-rich western China.
- After 2030 the introduction of SMRs significantly boosts the nuclear share of the data center electricity mix. Between 2030 and 2035 the rise in renewables and nuclear pushes coal into decline. By 2035 both sources together make up nearly 60% of the data center electricity supply in China.
The domestic political ambivalence to nuclear also means that China’s government is less inclined to hype up its nuclear buildout than might otherwise be the case. In contrast with Trump’s executive orders, and with China’s investments in renewables and high-tech, this is one area where Beijing is keeping it low key.
