Microsoft Builds Dedicated Team to Secure Nuclear Power for AI

What Happened

Microsoft has formed a dedicated internal team tasked with securing nuclear power agreements to meet the growing electricity demands of its artificial intelligence data centres. The team is focused on procuring energy from both existing nuclear facilities and next-generation reactor projects, including small modular reactors (SMRs), according to company disclosures and reports from people familiar with the matter.

Background

Microsoft operates one of the largest data centre networks in the world, supporting its Azure cloud platform and a broad portfolio of AI services developed in partnership with OpenAI. The company has committed to being carbon negative by 2030 and carbon zero across its entire historical emissions by 2050. Nuclear power, which produces no direct carbon emissions during operation, has been identified by Microsoft as a key pathway to meeting those targets while simultaneously satisfying the sharp increase in electricity consumption tied to AI workloads.

The formation of this team is not the company's first move into nuclear energy procurement. In 2023, Microsoft signed a power purchase agreement with Constellation Energy to restart a reactor at the Three Mile Island facility in Pennsylvania, with electricity from that plant designated to cover Microsoft's regional grid consumption. That deal drew significant industry attention as one of the first major technology company commitments to bring an idled nuclear plant back into service.

What the Team Is Doing

The newly assembled group operates across Microsoft's energy and infrastructure divisions. Its mandate covers negotiating long-term power purchase agreements with nuclear plant operators, evaluating sites for potential co-location of data centres near nuclear facilities, and engaging with developers of small modular reactor technology. SMRs are a class of nuclear reactor designed to be built in factories and deployed at smaller scales than conventional plants, though none have yet reached commercial operation in the United States.

Microsoft's energy procurement activities are separate from its capital investment decisions, though the company has previously indicated it expects to spend approximately 80 billion dollars on data centre infrastructure in fiscal year 2025 alone, with a significant portion of that directed toward facilities in the United States.

Industry Context

Microsoft is not alone among major technology companies in turning to nuclear energy. Google signed an agreement in 2024 with Kairos Power to purchase electricity from a series of SMRs the company plans to bring online beginning in 2030. Amazon Web Services has also pursued nuclear procurement, announcing agreements with Energy Northwest and Dominion Energy to explore reactor development near existing nuclear sites.

The collective interest from large technology firms has accelerated funding and regulatory attention toward the SMR sector. The U.S. Nuclear Regulatory Commission is currently reviewing licence applications from several SMR developers, including NuScale Power and X-energy, though timelines for commercial deployment remain subject to regulatory and construction variables.

Data centre electricity consumption in the United States is projected by the Department of Energy to reach between 6 and 12 percent of total national electricity demand by 2028, up from roughly 4 percent in 2023, driven substantially by the computational requirements of AI model training and inference.

What It Means in Practice

Having a dedicated procurement team allows Microsoft to move more quickly on energy agreements at a time when competition for contracted nuclear capacity is increasing. Power purchase agreements for nuclear output typically require long lead times, often spanning a decade or more for new construction projects, making early contracting activity strategically significant for companies planning data centre capacity years in advance.

Microsoft has not disclosed the size of the team, its specific budget, or a timeline for announcing additional nuclear agreements. The company is expected to provide further detail on its energy strategy during upcoming investor and infrastructure briefings scheduled for later in 2025.