Meta Embraces Nuclear Energy to Power its Massive AI Ambitions

Meta Platforms (META) has become the latest tech giant to turn toward nuclear energy to power its massive artificial intelligence (AI) ambitions. Facebook’s parent company struck a 20-year deal with nuclear energy company Constellation Energy (CEG) to buy power from its Illinois nuclear plant. The deal is slated to take effect in June 2027, about the same time when Clinton Clean Energy Center in Illinois was expected to retire.

Meta has entered into a typical Power Purchase Agreement (PPA), allowing it to purchase clean energy credits from the nuclear power generated at CEG’s Illinois nuclear plant. This arrangement enables Meta to offset its greenhouse gas emissions from other operations. It’s important to note that Meta does not plan to build an AI data center at the site. Also, PPAs do not remove power supply from the electricity grid.

Commenting on the deal, Meta’s head of global energy Urvi Parekh said, “Securing clean, reliable energy is necessary to continue advancing our AI ambitions.”

Meta’s Strategic Shift Toward Nuclear Energy

The financial terms of Meta’s deal remain unknown, but operating a nuclear plant for 20 years could presumably cost billions of dollars. Constellation Energy’s CEO Joe Dominguez said that Meta’s investment will help fund the costs related to federal relicensing, upgrading, and maintenance of the plant. Moreover, the deal will save 1,100 local jobs and generate $13.5 million annual tax revenue.

The single reactor at the Clinton plant can produce roughly 1,091 megawatts (MW) of electricity, which is equivalent to powering about 800,000 American homes. Future planned upgrades to the reactor could easily increase output by another 30 MW. Additionally, Constellation Energy is considering seeking an extension permit to add a new nuclear reactor at the site.

Tech Giants Turn to Nuclear Energy for AI Initiatives

Tech companies are making huge investments in the AI sector, viewing it as the pivotal area for future growth. They believe the investments made today will yield substantial returns in the future. Meta has committed to spending $65 billion on AI infrastructure this year. However, running large-scale AI models in data centers requires a substantial amount of power, and nuclear energy has drawn the sector’s attention as a viable solution. The AI ambitions of major tech companies have led to increased electricity consumption from the national grid and have exacerbated their carbon footprints.

Constellation signed a similar deal last year with tech biggie Microsoft (MSFT), but that is for a non-operative plant. That 20-year PPA deal will help restart Constellation’s idled undamaged reactor at the Three Mile Island plant in Pennsylvania. Similarly, Amazon (AMZN) and Alphabet (GOOGL) are investing in small nuclear reactor projects, with Google recently announcing a deal to invest in three advanced nuclear energy projects with Elementl Power.

Meanwhile, the White House has passed executive orders aiming to significantly enhance the country’s nuclear power capacity within the next 25 years. Nuclear energy is increasingly recognized as a reliable and climate-friendly solution of meeting the tech industry’s escalating electricity demands.

Is Meta a Good Company to Buy?

Analysts remain highly optimistic about Meta Platforms’ long-term stock trajectory. On TipRanks, META stock has a Strong Buy consensus rating based on 41 Buys, three Holds, and one Sell rating. Also, the average Meta Platforms price target of $696.12 implies 4.4% upside potential from current levels. Year-to-date, META stock has gained nearly 14%.

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