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But fraught with complex legal and regulatory hurdles

In sum, what to know:

• Nuclear power is the only carbon-free baseload power capable of meeting the 5-9s/99.999% reliability of modern data centers.
• BYOP and BTM bring hyperscalers and data center operators more flexibility and options for getting around current national power grid constraints.
• There is a 4-phase evolution from natural gas to nuclear, and the pivot is well underway.

Nuclear power. It’s the only carbon-free, 24/7 baseload power capable of meeting the massive energy and 5-9s (99.999%) reliability demands of modern data centers, but collocating data centers with nuclear plants is extremely complex and legally fraught with regulatory and liability issues, as well as very intricate contractual arrangements for direct sale of power, bilateral offtake agreements, or renewable offset and credit arrangements.

RCRTech spoke with two experts from Morgan Lewis Law, one of the world’s preeminent firms in the field of nuclear regulatory, energy, and technology law about where we are, and where we are headed:

• Arjun Ramadevanahalli, a partner at the firm, who advises on rates, wholesale markets, transmission and interconnection issues, and utility transactions before the Federal Energy Regulatory Commission (FERC) and state utility commissions. He helps developers and utilities navigate regulatory and commercial issues critical to powering data centers.
• Jane Accomando, a co-leader of the firm’s global energy industry team and a co-leader of the Data Center Strategic Initiative, advising nuclear energy companies and their partners, including hyperscalers, in connection with nuclear plant licensing, nuclear liability issues, regulatory compliance, government and internal investigations, enforcement, and spent fuel claims.

BYOP and BTM complexity

There’s going to be a significant shift in how AI data centers and other large energy consumers secure electricity, as they race to bypass a strained and slow-moving national power grid. For companies in a good position financially and in terms of commercial readiness to bring-their-own-power and behind meter (BYOP and BTM), nuclear power is currently the most reliable option in terms of 5-9s availability and 99.999% reliability. Though natural gas is the most prominent right now, it is going to ultimately be a bridge for many to small modular reactors that offer hyperscalers and data center operators flexibility and options to get around power constraints.

BYOP and BTM strategies are being watched closely by independent system operator (ISOs) and regional transmission organizations (RTOs) that manage the public power grid, as the pivot toward nuclear by data centers could reduce the immediate strain on the public grid. That said, it can also create extremely complex regulatory questions.

“Though PPA and utility agreements have been around for decades, the data center context adds an unprecedented level of complexity. The commercial terms, the risk appetite, the speed at which these agreements have to be executed – it’s an entirely different world,” said Ramadevanahalli, noting that “plugging-and-playing” something like an existing solar PPA won’t cut it. “Issues around land rights, leases, facilities, storage. It’s all a new frontier, so you need specialists with data center and large load experience, as well as experience with energy regulations, capital projects, finance and taxes.”

Accomando added, “In addition to the transactional counsel needed, companies need to have a full appreciation for the nuclear-specific issues that arise when co-locating a data center with a nuclear plant. It’s important that data center developers and hyperscalers loop in nuclear counsel early and often to avoid problems.”

“To break their reliance on host utilities, many of our commercial and industrial customers are looking to closely manage their own power needs and liability issues, and there’s a very regional focus because of the nature of power grids,” explained Ramadevanahalli, noting Virginia and other Midwest and Mid-Atlantic states in PJM Interconnect, or Texas within ERCOT’s region “have companies that want frameworks and structure for flexibility and options. They want to first remove the impact on the grid while also freeing up optionality to later connect to bring back up power or to sell energy back into the market.”

Chasing available, reliable power

Large-load customers need large amount of base load power, and 5/9s availability and 99.999% reliability at the top means natural gas and then nuclear. Accomando says reliability for base load right now is natural gas, with a phased approach toward nuclear. “On a few projects we’ve been working on, we typically have one generator assigned to one customer in a microgrid or one data center building, with an option to build on that so it’s modular. That means effectively building out a very large microgrid just behind the meter from the grid. Where you are, the land rights, proximity to gas, water, and interstate or intrastate pipelines are what matters,” notes Accomando.

What does that look like behind the meter? It can be a large microgrid campus where you have multiple tenants, or single-use facility that is pretty sure it will use every single MW that’s coming out of that combined cycle or large gas generator. “It’s ‘down the line’ that a lot of customers are evaluating whether they want to supplement or swap out the natural gas with SMRS,” said Accomando, who believes “that’s where the future is going – natural gas as a bridge to nuclear deployments.

In terms of licensing and construction timelines, this summer is the end goal for nuclear pilots under President Trump’s Executive Order 14301, which has tasked the Department of Energy with “unleashing the American nuclear renaissance,” streamlining of national laboratory processes for reactor testing under its new reactor pilot program.

“In that pilot program are test reactors, not commercial deployments, but some companies involved in that pilot are articulating they’re on track to meet the July 2026 deadline,” explained Accomando.

4-phase evolution toward nuclear

Phase I: Use what you’ve got

Leverage existing nuclear power to power AI, which means license renewals and extensions from the Nuclear Regulatory Commission. “Some companies seek extensions to operate for an additional 20 years, while others are in a subsequent license renewal period – where they  received an initial license renewal and now are looking for a subsequent license renewal – to get the right to operate for a total of 80 years,” explained Accomando.

As that happens, “the existing nuclear fleet is looking to make power upgrades, generating more power with existing reactors,” which she says is happening at several sites now.

Phase II: The Nuclear Restart

Breathing new life into a previously shuttered plant is happening in three different states right now:

• Constellation’s Crane Clean Energy Center in PA (formerly the Three Mile Island Unit 1) with Microsoft;
• NextEra Energy’s Duane Arnold Energy Center in Iowa (with a commitment from Google to purchase carbon-free nuclear energy);
• Holtec’s Palisades Nuclear Plant in Michigan.

Phase 3: Build brand-new plants

“There’s a track record in our supply chain, with about 90 to 100 reactors generating almost 20% of our power,” said Accomando, who sees a whole host of new reactor companies developing advanced reactors. These new companies are exploring cooling innovations other than water, with Gen III+ and Gen IV designs that utilize passive safety systems—including gravity, natural circulation, and convection.

The first U.S. nuclear reactor built from scratch in 30 years is Southern Company’s Plant Vogtle, Units 3 and 4, (Westinghouse AP1000 design) near Waynesboro, Georgia (completed April of 2024), which are expected to generate approximately 17,000,000 to 18,000,000 MW-hours of carbon-free electricity every year.

Phase 4: Small modular reactors (SMRs)

“The longer-term play, SMRs, are where the hyperscalers are heading. Already, Amazon, Google, Microsoft, and Meta have started funding the development of SMRs as a foundation for longer-term, carbon-free data centers.

• Google was the first, with a PPA with Kairos and its fleet of SMRs. The first unit is forecast to be online by 2030, with a total of 500 MW by 2035.
• Microsoft’s Crane Clean Energy, a Three-Mile Island restart, includes a commitment to buy 835 MW of power. PJM accelerated approval for the project, which is expected to open in 2027 (a year ahead of schedule).
• Amazon (AWS) is part of the $500 million funding round for X-energy and a partnership with Energy Northwest to deploy four SMRs in Washington state by the early 2030s.
• Meta: Issued a massive RFP in late 2025 seeking 1–4 GW of new nuclear generation capacity specifically to support AI workloads.

This pivot toward SMRs won’t happen overnight, but it will be the primary “always on” (baseload) power source for modern data centers that require “five-nines” (99.999%) reliability. In the shift to BYOP/BTM, there will be more momentum behind co-locating data centers directly with power plants to bypassing the national power grid’s constraints.

And as mentioned before, navigating the federal and state regulations and new contractual frontiers will require specialists in navigating complex land rights, leases, and PPAs, as well as the financial risks of massive capital projects and increasingly complicated tax and finance structures.