AI’s insatiable demand for power has tech companies hunting for new energy sources — a search that has fueled competition and investment into fusion and fission startups.
For many, natural gas is the easy answer for 24/7, baseload power. It’s tested, inexpensive, and widely available. But the war in the Middle East exposed its vulnerable supply chain after Iranian drone strikes took out a significant portion of natural gas infrastructure in Qatar, a major exporter. At the same time, surging demand has created a waitlist for gas turbines so long that today’s orders probably won’t be fulfilled until the early 2030s.
Those delays not only pose a risk to tech companies, but also to the natural gas industry itself.
In the U.S., 40% of the natural gas consumed today goes toward generating electricity. By the time the turbine shortages relent, the industry could be flush with a fresh crop of competitors. Both small modular nuclear reactor (SMR) startups and fusion power startups plan to start connecting their first commercial power plants to the grid in the next five to seven years, about how long it takes to get parts for a new natural gas power plant.
Nuclear threat
SMR startups might have the best shot at displacing natural gas power plants. In many instances, the technology tweaks the designs of existing fission reactors, but the fundamental physics has been proven and widely used for decades.
Several SMR companies aim to have reactors up and running before the decade is over. Kairos Power, which counts Google as a future customer, is one of them. The company received approval for its Hermes 2 demonstration reactor in 2024, and construction is well underway. Oklo, which merged with Sam Altman’s blank check company in 2024, is targeting 2028 for its first commercial operations, according to its annual report.
Others hope to follow a few years later. X-energy, which counts Amazon as an investor, is aiming for the early 2030s, while the Bill Gates-founded TerraPower, which has a deal with Meta, is planning to begin commercial operations in 2030.
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To displace natural gas as the generating source of choice, SMRs will need to scale quickly, realizing the economies of scale that their business models depend on. That won’t be easy. But tech companies appear confident enough that they’re either investing in startups or signing agreements with them for gigawatts worth of power.
Fusion’s timeline
The other technology companies are warming to is fusion power. Though it isn’t as proven as fission, nuclear fusion promises to deliver large amounts of power using little more than seawater as fuel.
Fusion startups are also targeting the early 2030s — or sooner — to deploy their first reactors. Fusion power
One front-runner, Commonwealth Fusion Systems, is on track to flip the switch on its demonstration reactor next year. Its first commercial reactor, the 400-megawatt Arc, is expected to start generating power in Virginia in the early 2030s.
Another startup, a relative newcomer, hopes to start construction on a grid-scale power plant in 2030. Inertia Enterprises has based its technology on the reactor design employed by the National Ignition Facility, which was the first to prove that controlled nuclear fusion reactions could generate more power than they consume.
But Helion may have the most aggressive timeline out of all of them. The Sam Altman-backed startup is racing to build Orion, its first commercial-scale power plant, by 2028 to supply Microsoft with electricity. The company is also reportedly in talks with OpenAI to provide up to 5 gigawatts by 2030 and 50 gigawatts by 2035. To hit those numbers, Helion will have to build 800 reactors by the end of the decade and another 7,200 in the five years after that.
If the startup can deliver power in those quantities, it would completely rewrite the energy market. Last year, the U.S. added 63 gigawatts of new generating capacity across all sources. If Helion can build close to 10 gigawatts of new capacity every year, the company alone would add more power than the entire natural gas industry did last year.
The price problem
The challenge for all those companies — including gas turbine manufacturers — is cost.
SMR startups are counting on mass manufacturing to drive cost reductions, but that hypothesis has yet to be proven. Today, nuclear power is one of the most expensive forms of new generating capacity at around $170 per megawatt-hour, according to Lazard. Fusion faces a similar scale-up challenge, though it faces even more unknowns. Some experts predict one megawatt-hour from a fusion power plant could run about $150 initially.
New baseload natural gas power plants, meanwhile, run about $107 per megawatt-hour, per Lazard, though prices have been trending up in recent years, perhaps setting it on a collision course with both new fission and fusion reactors.
But they might all be undercut by renewables paired with batteries.
The costs of wind and solar power have dropped precipitously over the last decade. Wind power appears to have hit a bit of a plateau in recent years, but solar prices continue to inch downward with no signs of stopping. Batteries, too, have grown cheaper over the years, to the point where grids are installing massive quantities of them — 58 gigawatts-hours last year. Even without subsidies, solar paired with batteries ranges from $50 to $130 per megawatt-hour, overlapping fusion, fission, and natural gas.
Those figures are all with current battery technology derived from chemistries intended for electric vehicles. Newer designs aimed squarely at grid connections could slash prices further. Form Energy, for example, recently signed a deal to provide Google with electricity from a 30 gigawatt-hour iron-air battery. Another, XL Batteries, can repurpose old oil tanks to store its inexpensive organic fluid — the size of the battery is only limited by the size and number of the tanks.
Because those new batteries eschew the use of critical minerals like lithium, cobalt, or nickel, they promise to dramatically reduce the cost of long-duration energy storage to the point where it’s hard to make a case for anything else.
Facts Only
AI's rising power demand has increased competition for energy sources, driving investment in fusion and fission startups.
Natural gas is the dominant baseload power source but faces supply chain vulnerabilities, as seen in Iranian drone strikes on Qatari infrastructure.
Orders for new gas turbines face delays, with fulfillment not expected until the early 2030s.
40% of U.S. natural gas consumption is used for electricity generation.
SMR startups aim to deploy commercial reactors by the late 2020s or early 2030s, with Kairos Power, Oklo, X-energy, and TerraPower among the front-runners.
Kairos Power received approval for its Hermes 2 demonstration reactor in 2024 and is backed by Google.
Oklo, merged with Sam Altman’s blank check company, targets 2028 for commercial operations.
X-energy, backed by Amazon, and TerraPower, founded by Bill Gates and partnered with Meta, plan early 2030s deployments.
Fusion startups like Commonwealth Fusion Systems and Helion are targeting the early 2030s for commercial reactors.
Commonwealth Fusion Systems plans a 400-megawatt Arc reactor in Virginia by the early 2030s.
Helion, backed by Sam Altman, aims to build its first commercial plant by 2028 and supply Microsoft, with potential deals for OpenAI.
Helion’s long-term goal includes 50 gigawatts by 2035, requiring thousands of reactors.
Current nuclear power costs around $170 per megawatt-hour, fusion around $150, and natural gas around $107.
Renewables paired with batteries range from $50 to $130 per megawatt-hour, overlapping with nuclear and gas costs.
New battery technologies, like Form Energy’s iron-air batteries and XL Batteries’ organic fluid storage, could further reduce costs.
Executive Summary
Tech companies are facing a power crisis as AI's growing energy demands outpace traditional energy sources. Natural gas, long the go-to for baseload power, is now vulnerable due to supply chain disruptions—like Iranian drone strikes on Qatari infrastructure—and a years-long waitlist for new turbines. This has accelerated interest in nuclear alternatives, particularly small modular reactors (SMRs) and fusion power. SMR startups like Kairos Power, Oklo, X-energy, and TerraPower aim to deploy commercial reactors by the late 2020s or early 2030s, with backing from tech giants like Google, Amazon, and Meta. Fusion startups, including Commonwealth Fusion Systems and Helion, are targeting similar timelines, with Helion planning to supply Microsoft and potentially OpenAI with massive power capacity. However, cost remains a hurdle: nuclear and fusion power are currently more expensive than natural gas and renewables paired with batteries, which continue to drop in price. The energy market is at a crossroads, with renewables and storage technologies posing stiff competition to both fossil fuels and emerging nuclear solutions.
The race to power AI and data centers is reshaping energy investment, with tech companies betting on nuclear innovation while renewables and battery storage advance rapidly. The outcome will hinge on whether SMRs and fusion can achieve economies of scale and cost parity before renewables dominate the grid.
Full Take
The strongest version of this narrative highlights a genuine energy transition dilemma: AI’s voracious power needs are exposing the fragility of fossil fuel supply chains while accelerating investment in nuclear alternatives. The piece credibly frames SMRs and fusion as plausible contenders, backed by tech giants and ambitious timelines. It also acknowledges the cost and scalability challenges these technologies face, particularly against the relentless price declines of renewables and storage. This balanced approach avoids hype while recognizing the stakes—energy security, economic competitiveness, and climate goals are all in play.
However, the narrative leans into a subtle "techno-optimism" pattern, where breakthroughs in nuclear and fusion are presented as inevitable solutions to AI’s energy crisis. The piece doesn’t explicitly dismiss renewables but frames them as just one option in a competitive race, rather than the dominant force they already are in many markets. The focus on Helion’s aggressive scaling plans, for example, risks overstating fusion’s near-term viability without deeper scrutiny of its technical and regulatory hurdles. There’s also an implicit assumption that AI’s energy demands must be met at any cost, rather than questioning whether efficiency or demand-side solutions could mitigate the crisis.
Root cause: This narrative reflects a broader paradigm where energy abundance is treated as a prerequisite for technological progress, with little discussion of trade-offs. The unstated assumption is that nuclear innovation will outpace renewables, despite historical evidence that solar and wind have consistently defied cost projections. The pattern echoes past energy transitions—like the early 20th-century shift from coal to oil—where incumbent industries underestimated disruptive alternatives.
Implications: If SMRs and fusion succeed, they could reshape geopolitics by reducing reliance on fossil fuels and volatile supply chains. But if they fail to scale, the energy gap could deepen dependence on natural gas or renewables, with uneven costs borne by consumers and industries. The second-order risk is that overinvestment in unproven nuclear tech could divert resources from proven renewables, delaying decarbonization.
Bridge questions: What if AI’s energy demands could be met through radical efficiency gains rather than just supply-side expansion? How might regulatory and public perception barriers slow nuclear adoption, even if the tech works? What would it take for renewables and storage to render nuclear alternatives obsolete before they even launch?
Counterstrike scan: A coordinated influence campaign pushing this narrative would emphasize AI’s existential energy needs to justify massive nuclear investment, downplay renewables’ progress, and frame fossil fuels as unreliable. The actual content doesn’t fully match this—it presents renewables as serious competitors—but the focus on nuclear’s potential over its risks could still serve industry or political agendas. No clear manipulation detected, but the framing warrants scrutiny.
Patterns detected: ARC-0024 Ambiguity (techno-optimism without full risk disclosure), ARC-0043 Motte-and-Bailey (nuclear as "necessary" for AI, but renewables as "just an option").