Did DeepSeek end nuclear energy’s AI comeback?

Analysts say it is far too soon to suggest AI energy needs will plateau

Nuclear energy seems set for a renaissance, in part because of the electricity needs of AI. Getty Images

Just when it looked like the world was ramping up for a nuclear power renaissance, driven in part by AI's insatiable appetite for energy, something unexpected happened: AI became more efficient.

At least that is the claim made by DeepSeek, the Chinese AI platform that purports to do as much as OpenAI's ChatGPT with far less computing power and fewer data centres, and therefore less energy.

Those claims sent several energy companies' stock prices briefly careening, including Constellation Energy, which recently made the most of the energy requirements of AI to boost its nuclear power offerings to technology companies.

Last September, Constellation Energy announced it would be restarting the Three Mile Island Unit 1 in Pennsylvania. Reuters

Just how intense was that need for more energy to propel AI data centres? Last September, Constellation Energy announced it would be restarting the Three Mile Island Unit 1 in Pennsylvania as part of a 20-year power purchase agreement with Microsoft.

Three Mile Island (TMI) was the site of the one of the biggest nuclear accidents in US history. In 1979, the core of Unit 2 was partially exposed, leading to a temporary evacuation of the nearby area and a lengthy clean-up.

The accident left a black mark on the US nuclear industry, one that remains to this day, although recent polling has suggested those concerns may be waning.

President Jimmy Carter, first lady Rosalynn Carter and Pennsylvania governor Richard L Thornburgh in a control room at the Three Mile Island nuclear plant in April 1979. Getty Images

All that said, debates remain about the potential health effects stemming from the accident, and research is continuing.

During a recent interview at Microsoft's headquarters in Redmond, Washington, Alistair Speirs, the company's senior director of infrastructure, was asked by The National if the technology giant was taking a pronuclear energy stance with some of its recent moves to power its AI ambitions, particularly the agreement with Constellation Energy.

“Our stance is zero carbon energy,” he said. “We really look at that as the view, so the next question is where can we source zero carbon energy?”

He said Microsoft uses power purchase agreements (PPAs), which are long-term contracts committing to a set amount of energy usage from the grid. That way, Microsoft ensures that the energy provided is supplemental, and therefore not raising energy prices for consumers.

“We're essentially sending a supply signal to the utility providers,” he said, referring to the deal with Constellation Energy's Three Mile Island.

Mr Speirs said that other sources of energy such as hydrogen, solar and wind, depending on the location of data centres, are also in the mix for Microsoft.

The tech giant is not alone in its push to meet the energy needs of data centres. Alphabet, parent company of Google, along with Amazon, Oracle, OpenAI and others have recently expressed interest in using small modular nuclear reactors (SMRs) to help meet those needs.

Microsoft has not been shy about the need for more energy to power its AI ambitions. Photo: Cody Combs

Mr Speirs spoke to The National in January, before DeepSeek debuted. Some have suggested that increased AI efficiency will blunt and possibly put an end to efforts at bolstering nuclear energy.

That speculation was the main ingredient that led to a sudden drop in Constellation's stock price in late January, along with other energy companies amid the rise of DeepSeek.

Maryam Salman, a senior consultant for Middle East markets at Qamar Energy, said that the situation is far more nuanced, and that DeepSeek's emergence is hardly a death blow for a nuclear renaissance.

“While it is true that the launch of DeepSeek upended investor confidence in nuclear energy for data centres, especially in the West, the underlying nuclear thesis remains intact – power demand is on the rise and will continue growing, whether from homes, factories, commerce, industry [or] new technologies,” she said.

“AI is infinitely scalable, and as new applications emerge and competition intensifies between the US and China, innovation will accelerate, ensuring sustained power demand for the sector. In this context, investing in nuclear energy can serve as a hedge against the unpredictable future of AI power needs,” she added.

Andrea Zanon, chief executive of Confidente, a Washington-based consulting group echoed those sentiments. “I don't want to say it's a no-brainer, but it's clearly happening,” he said, referring to the increasingly prominent nuclear energy push, particularly for smaller, modular nuclear reactors.

He was not very concerned about DeepSeek's long-term impact on energy stocks, particularly nuclear energy. “It's a part of, unfortunately, the panic and the psychology of money,” he said “This AI revolution is only at the beginning and it's going to be manifold bigger than what we see in the news every day, therefore the clean tech aspect, nuclear, will be needed.”

Yet for all the analyst optimism, there remains a stigma around nuclear power. The shadows of the 1979 accident at Three Mile Island, Chernobyl's deadly 1986 explosion and Fukushima's 2011 disaster loom large.

Eric Epstein, director of Three Mile Island Alert, said his group opposes efforts to restore Unit 1 at the nuclear power station. Photo: TMI Alert

Eric Epstein is director of Three Mile Island Alert, a grass roots safe energy organisation founded in 1977, two years before the Unit 2 accident at the power station. He said that while the world does appear to be in a “nuclear zeitgeist”, it is mostly “mindless”.

“How does exporting [Three Mile Island Unit 1's] energy to another zip code keep the lights on in central Pennsylvania?” he said, in an email to The National. “Starting a zombie nuclear plant to provide electricity to data centres, inanimate beings in northern Virginia, Illinois and Ohio, that's worth fighting against.”

Mr Epstein also said that tax dollars were ultimately being spent in the form of a federal loan to assist Constellation in reviving the reactor, and attempting to greenwash the nuclear industry.

“Consumers, taxpayers, and citizens have been told that nuclear power deserves a second chance because it has now been rebranded as environmentally friendly, simply because it's not coal.”

Constellation Energy said that, pending approval from the Nuclear Regulatory Commission, TMI's Unit 1 is expected to restart in 2028.