Big tech companies are considering a significant shift in their energy sources to fuel the AI boom, with a potential move towards nuclear power. This move, while beneficial for the companies, has raised concerns about its impact on the grid and the environment.

What Happened: Tech giants such as Amazon.com Inc. (NASDAQ:AMZN) are in discussions with the owners of about a third of the U.S. nuclear power plants to directly source electricity for new data centers. This move is driven by the increasing demand for electricity due to the artificial intelligence boom, reported The Wall Street Journal, citing people familiar with the matter.

Amazon Web Services is reportedly close to securing a deal with Constellation Energy (NASDAQ:CEG), the largest U.S. nuclear power plant owner. This follows Amazon's acquisition of a nuclear-powered data center in Pennsylvania for $650 million in March.

While this move could accelerate the addition of data centers required for the global AI race, it also raises concerns. The tech companies' potential reliance on existing electricity resources could drive up prices for other customers and hinder emission-cutting goals.

Even if the tech companies offset these deals by funding the addition of renewable energy, experts warn that this could lead to a greater reliance on natural gas, which produces carbon emissions.

The shift towards nuclear power marks a reversal of fortune for power plant owners in competitive markets, who have struggled to compete with wind, solar, and natural gas. The willingness of tech companies to pay a premium for nearly uninterrupted, carbon-free power could revitalize the nuclear power industry.

"To supplement our wind- and solar-energy projects, which depend on weather conditions to generate energy, we're also exploring new innovations and technologies, and investing in other sources of clean, carbon-free energy," an Amazon spokeswoman said, according to the report.

Why It Matters: The tech industry's increasing energy demands, particularly due to AI, have been a topic of concern. Bill Gates recently defended the substantial increase in energy consumption due to AI systems, arguing that the technology would ultimately offset its high electricity usage.

However, without improved energy efficiency, AI data centers could potentially consume a quarter of the U.S. power requirements by 2030. This has prompted companies like ARM Holdings to focus on reducing the power consumption of AI technologies.

On the other hand, nuclear power has been hailed as a solution to combat the climate crisis. Gates' energy company TerraPower has initiated construction on a next-generation nuclear power plant in Wyoming, a move expected to significantly transform power generation.

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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote