During his first week in office, President Trump issued Executive Orders on Removing Barriers to American Leadership in Artificial Intelligence, Declaring a National Energy Emergency, and Unleashing American Energy.  On February 14, he issued another Executive Order, Establishing the National Energy Dominance Council.  He has also announced plans by a joint venture of Open AI, Oracle, MGX and SoftBank, dubbed Stargate, to invest $500 billion over the next four years in AI infrastructure, including data centers co-located or paired with electric generation facilities.  Data centers use significant electricity, and their use will increase in the coming years.  By 2030, our “algorithm economy” is projected to grow to more than 9 percent of electricity demand, or “load.”  To sustain American leadership in artificial intelligence will require unprecedented investment in new generation to serve load.

Concerns have arisen that the explosive growth in data centers’ load may stress the national electric grid, potentially imperiling reliability.  One solution that many large technology companies (known as “hyperscalers”) are exploring is the co-location of data centers and new nuclear generation.  Large data centers require vast supplies of dedicated, around-the-clock, firm power, preferably from zero-carbon sources due to hyperscalers’ climate commitments.  Renewable sources such as wind and solar combined with battery storage are a good near-term solution.  However, this post focuses on emerging interest in co-locating data centers with investments in new nuclear capacity.  Several hyperscalers have recently announced plans to restart decommissioned nuclear reactors or to invest in or contract with small modular reactors (SMRs), a new nuclear technology.  

The Trump Administration has positioned itself as supporting the rapid deployment of both co-location and nuclear energy.  President Trump has promoted co-location as a solution for data centers, and on February 7 the Secretary of Energy put out an order implementing Unleashing American Energy which states that the Department will take actions to “unleash commercial nuclear power in the United States” and “streamline permitting.”  However, there are significant regulatory hurdles in this area.  In this series of two blogs, we examine regulatory developments and barriers that a co-location arrangement could face under the existing regulatory frameworks administered by the Nuclear Regulatory Commission (NRC) and the Federal Energy Regulatory Commission (FERC).  If the Trump Administration intends to break through these barriers to enable rapid and large-scale deployment of co-located data centers, it may well need to do so through a new set of more detailed executive orders, agency regulations, and perhaps legislation. 

Nuclear Licensing Developments

Some hyperscalers find nuclear generation attractive because it can provide firm, dependable, around-the-clock clean energy and co-location can provide capacity that is principally or even wholly dedicated to serving data centers’ loads.  But few nuclear facilities have been licensed or relicensed in recent years due in part to the enormous capital costs and lengthy approval processes to build and license new light water reactors.

However, some recent regulatory developments at the NRC may become a basis for a more rapid nuclear build-out to serve hyperscaler data centers using newer, more economic reactor designs, such as SMRs.  In the past several years, Congress and the NRC have made legislative and regulatory changes seeking to shorten the timeline for licensing in order to facilitate these new nuclear technologies and designs. 

Shorter Timelines

Historically, the nuclear licensing process could take more than a decade.  This drawn-out timeline, with its attendant uncertainties, is not attractive for hyperscalers looking to bring nuclear capacity online quickly to address data centers’ rapidly growing energy needs.  There are two main ways in which Congress and the NRC have attempted to shorten the nuclear licensing timeline: 1) mandating specific review deadlines for certain types of applications; and 2) streamlining environmental reviews. 

The ADVANCE Act, signed into law by President Biden in July 2024, mandates specific review deadlines for certain types of nuclear licensing applications.  Specifically, Section 207 of the Act sets a 25-month review deadline for reactors being built on already-operating nuclear sites.  To qualify, an applicant must 1) submit an application for a nuclear reactor design that is the same or substantially similar to that of a reactor the NRC has already licensed; and 2) propose to build the new reactor on the same site as a previously licensed reactor or an adjacent site. 

In addition, both the ADVANCE Act and proposed NRC regulations aim to streamline the environmental review process for nuclear licensing.  Section 506 of the ADVANCE Act requires the NRC to submit a report to Congress on its efforts to facilitate “efficient, timely, and predictable environmental reviews of nuclear reactor applications,” including through expanded use of categorical exclusions, environmental assessments, and generic environmental impact statements.  To that end, in October 2024 the NRC proposed a rule codifying a generic environmental impact statement (GEIS) to be used in the licensing process for advanced nuclear reactors.  The GEIS uses a set of plant parameters to determine which potential environmental impacts would be common to many nuclear reactors and which potential impacts would be unique to a particular proposed reactor.  The NRC can then use the generic analysis for common impacts while performing a project-specific analysis of any unique impacts.  In addition to shortening the environmental review timeline, the NRC estimates that the GEIS could reduce the costs of environmental reviews for new advanced reactors by between 20 percent and 45 percent depending on the project.  The comment period for the proposed rule closed on December 18, 2024.  The proposal appears consistent with the Trump Administration’s first-week Executive Orders, including those focused on accelerating the permitting of energy projects. 

New Designs and Technologies

The NRC has also taken steps to facilitate development and licensing of new nuclear reactor designs and technologies.  The existing licensing pathways in Parts 50 and 52 were designed for conventional large light-water reactors, but advanced reactors incorporating new designs and technologies, such as SMRs, are cheaper, more readily deployable, faster to construct, and simpler to operate.  SMRs and microreactors may be particularly important to hyperscalers because they can be factory assembled, offering flexibility in how and where they are deployed, and they can be scaled to meet expanding data center load at a particular site or nearby.

We focus here on two developments that may facilitate the licensing of SMRs and microreactors: the NRC’s proposed Part 53, which would create a new technology-neutral licensing pathway; and Section 208 of the ADVANCE Act, which requires the NRC to create licensing guidance for microreactors.

In January 2019, President Trump signed into law the Nuclear Energy Innovation and Modernization Act (NEIMA), which in relevant part directs the NRC to create a “technology-inclusive licensing framework” for optional use by advanced reactor designers by 2027.  “Technology inclusive” means that, regardless of the reactor’s design, one set of rules will set the safety standards that all reactors must meet.  Since NEIMA’s enactment, NRC has worked to develop a new framework to meet these requirements.  In October 2024, the NRC published the most recent version of a rule that would create a new licensing framework, Part 53.  Instead of requiring particular reactor designs, the proposed Part 53 would use performance-based objectives to evaluate whether a proposed nuclear facility can be licensed, without prescribing how each reactor must meet those objectives.  This allows more flexibility in how applicants meet the NRC’s safety and security standards.  The comment period for the proposed rule was extended to February 28, 2025.  It is not yet clear whether President Trump’s January 20 memorandum freezing new regulations applies to independent agencies such as the NRC.  If it does apply, then it would have no effect on the comment period for the rule.  However, the memorandum may delay any further rulemaking by the NRC because it requires agencies to refrain from issuing any rule until an agency head appointed by President Trump reviews and approves the rule.

Section 208 of the ADVANCE Act requires the NRC to develop strategies and guidance to license and regulate microreactors within 18 months of enactment.  Once the NRC does so, it must implement this guidance within the existing regulatory framework (Part 50 or 52), the new Part 53 regulatory pathway, or a new rulemaking within three years of enactment. 

Section 201(c) of the Act lowers regulatory costs for advanced reactor applications.  Hyperscalers may also be able to chase a unique incentive granted in Section 202 of the ADVANCE Act.  The first applicant to be issued a license in one of five new technology categories will be reimbursed the full cost of regulatory fees otherwise charged by the NRC.  These incentives for new nuclear designs and technologies appear consistent with the Department of Energy’s recent statement that it will work to “enable the rapid deployment” of “next-generation nuclear technology.

In Part 2 of this blog post, we address regulatory developments at FERC concerning co-located data centers.