Recently, escalating geopolitical tensions in Iran and surrounding regions have led to a significant rise in international oil prices last week. Although prices dropped considerably in the following trading sessions, falling from a brief high of $115 per barrel on March 9 to the current level of around $80 per barrel, their cumulative increase since the beginning of the year still approaches 40%. Meanwhile, natural gas prices have also risen by over 16% year-to-date. This volatility and price increase in the energy market are presenting an unexpected challenge for the development of the artificial intelligence (AI) industry.
According to data from the International Energy Agency (IEA), approximately 60% of the global data center electricity demand currently still relies on fossil fuels, with renewable energy supplying about 27% of the electricity and nuclear power contributing the remaining 15%. As the AI industry’s demand for computing power explodes, data centers are being built on a large scale worldwide to provide support. Against this backdrop, the high volatility of fossil fuel prices undoubtedly adds a new obstacle to this construction process.
This situation could present an opportunity for companies dedicated to developing Small Modular Reactors (SMR), such as Oklo (OKLO) and NuScale Power (SMR). This type of reactor could potentially help data centers break free from dependence on the price volatility of traditional fuels. Oklo’s business strategy is particularly clear, focusing on providing reliable baseload power for AI data centers—a power supply method largely insulated from fossil fuel price fluctuations. Industry perspectives suggest that rising energy prices may bring more attention to companies capable of supplying clean, reliable, and price-stable electricity to data centers.
Looking ahead, the growth in energy demand is closely tied to the expansion of AI data centers. It is projected that by 2030, U.S. energy demand will grow at an annual rate of 4%, with the primary driver being the construction of data centers to support the AI industry. Data indicates that the proportion of total U.S. energy consumption attributed to data centers is expected to climb from 4.3% in 2024 to 11.7% by 2030. In this wave of energy transition, the biggest winners might not be data center operators or AI startups, but SMR companies like Oklo and NuScale Power. The micro-nuclear reactors they design and manufacture can provide clean, scalable power for data centers and the AI industry, independent of the traditional power grid.
However, the path to commercialization for SMR technology is not without obstacles. According to a recent report from Goldman Sachs, small modular reactor technology has been under development for over 20 years, yet only a handful of small-scale projects are currently in commercial operation globally. The challenges facing this technology are similar to those of all nuclear technologies, primarily including high construction costs, lengthy construction periods, and the inability to fully demonstrate economic advantages over larger conventional nuclear plants. The Goldman Sachs report also pointed out that although these technologies were long overlooked for being too far from commercialization, they are now attracting significant support from both the public and private sectors.
The current explosive growth of the AI industry might be the key opportunity to unlock the potential of SMRs. AI companies and their service providers (such as data center operators) have a growing thirst for electricity. To secure dedicated, scalable, and reliable power supplies, they might even be willing to bear higher long-term operating costs. Deploying SMR technology could be particularly attractive, especially in remote, colder regions where cooling costs are lower.
In this context, comparing the two SMR companies, Oklo and NuScale Power reveals distinct strategic positioning. Oklo is more focused on serving the AI industry, developing smaller reactors with power outputs ranging from 15 to 75 megawatts. In contrast, NuScale is better suited for meeting the broad needs of public utilities through large-scale, multi-billion dollar projects. This strategic difference is also reflected in their market valuations: Oklo’s valuation stands at $9.1 billion, while NuScale’s market cap is $3.7 billion. Deeper analysis suggests that Oklo’s technology and positioning appear more precisely targeted at the AI market, which is currently the biggest driver behind the renewed interest in SMR technology. Therefore, despite having a higher valuation, Oklo is considered by some to be the more advantageous choice in the long run.
