The Nuclear Renaissance: Splitting Atoms, Not Hairs
"In science, there is only physics; all the rest is stamp collecting." — Lord Kelvin
by Pierre Daillie, Managing Editor, AdvisorAnalyst.com
The global energy landscape is at a crossroads, where soaring demand intersects with the relentless push for decarbonization. On one side, we have Goldman Sachs projecting a surge in energy consumption driven by artificial intelligence and data centers. On the other,
offers a skeptical lens on the feasibility of an all-renewable future. The question isn't just about which path to take, but whether our ambitions align with the unforgiving laws of physics.The Data Center Dilemma
Goldman Sachs' recent report1, "AI/Data Centers' Global Power Surge," forecasts a staggering 165% increase in data center power demand by 2030 compared to 2023 levels. "As global data center power demand grows... we continue to see Big Tech taking an all-in approach to sourcing power and pursuing low-carbon solutions," the report states.
This surge is not trivial. Data centers could consume up to 8% of U.S. power demand by 2030, up from 3% today. Globally, data centers are projected to account for 3-4% of power demand, effectively adding the equivalent of a top 10 global power consumer to the grid.
Goldman Sachs acknowledges the challenge: "While we do not see a Green Premium for intermittent power in the US, our analysis suggests a Green Reliability Premium for low-carbon round-the-clock power solutions vs natural gas combined cycle in the US." In simple terms, while wind and solar are becoming cost-competitive, ensuring reliable power 24/7 without fossil fuels comes at a higher price.
Doomberg's Reality Check
In "Storage Units," Doomberg doesn't mince words about the limitations of renewable energy and battery storage. "It is astounding that governments the world over are directing trillions of dollars of taxpayer money toward the transition to wind, solar, and batteries without first demonstrating whether a system based solely on those technologies is even viable," he writes.
Quoting Francis Menton of Manhattan Contrarian, Doomberg further emphasizes the impracticality of relying solely on renewables: "Nobody would be happier than me to see a demonstration project built that showed that wind and solar could provide reliable electricity at low cost. Unfortunately, I know too much about the subject to think that that is likely, or even remotely possible"2.
He puts theory into practice by experimenting with battery storage at the household level. His findings are sobering: powering basic electronics is manageable, but when it comes to heating, cooling, or running appliances like water heaters, the limitations become glaringly apparent. "Our batteries could power a highly efficient heat pump for a paltry 4.5 hours," he notes. Scaling this up to meet the demands of an average household—or an energy-hungry data center—is a monumental challenge.
The Nuclear Bridge
Both Goldman Sachs and Doomberg converge on one critical point: nuclear energy is indispensable for a reliable, low-carbon future.
Goldman Sachs sees a "nuclear renaissance" on the horizon. "We are in the early stages of a nuclear renaissance in the U.S. and globally," the report asserts. It highlights recent contracts between tech giants and nuclear providers, noting that "hyperscalers will remain committed to pursuing low-carbon power solutions based on our analysis of Green Reliability Premiums, industry discussions, and recent contracts".
The investment bank also points out the economic viability: "Our analysis suggests that the capital requirements for Green Reliability Premiums to source data center power demand to be modest relative to the EBITDA (<5%) and corporate returns of key hyperscalers." In other words, the tech giants can afford the premium for reliable, nuclear-generated power without significantly denting their profitability.
Doomberg, while critical of many green initiatives, implicitly supports this nuclear pivot. By highlighting the inadequacies of renewables and battery storage, he makes a compelling case for alternatives that can deliver reliable baseload power. In previous articles, he has emphasized that "the resources expended in a state that already carefully balances the environment with the limits of physics have been remarkable," pointing out that nuclear energy aligns well with both environmental goals and physical realities3.
The Political Undercurrents
Goldman Sachs cautiously notes regulatory hurdles: "Lowering the capital costs of SMRs and accommodating nuclear expansion while minimizing impact to reliability/pricing elsewhere in the grid will be key for long-term competitiveness." The report acknowledges that permitting, skilled labor, and uranium supply are significant challenges.
Doomberg is less optimistic about the political landscape. In "Shift Shaping,"4 he discusses the potential rollback of environmental regulations with the election of leaders less committed to the climate agenda. "If lawfare is going to trump election results, one must conclude that last week’s elections were incredibly bullish for attorneys across the country," he quips, highlighting the legal tug-of-war that often stalls energy projects.
He also warns about the risks of ideological rigidity: "For those most obsessed with counting carbon, pretty darn good won’t ever be enough." Doomberg suggests that even significant strides in reducing emissions won't satisfy activists unless they align perfectly with their ideals, potentially stymieing practical solutions like nuclear energy.
The Real Costs and Consequences
Goldman Sachs quantifies the "Green Reliability Premium" for nuclear and other low-carbon solutions. They estimate it to be between $19-$72 per MWh compared to natural gas. However, they argue that at a carbon price of $100/ton, "much or all of the Green Reliability Premium goes away," making nuclear and renewables more competitive.
Doomberg, ever the skeptic, might counter that relying on hypothetical carbon pricing mechanisms is risky. Real-world energy decisions are often made without such pricing in place, and assuming its implementation could be a miscalculation.
Moreover, Goldman Sachs emphasizes that "while we do not see a Green Premium for intermittent power in the U.S., our analysis suggests a Green Reliability Premium for low-carbon round-the-clock power solutions." This suggests that while renewables are cost-effective on paper, their reliability issues necessitate backup solutions, adding to the real cost.
Doomberg's hands-on battery experiment underscores this point: "When the solution is a Pandora’s box of discomfort, expense, and degradation, perhaps it is time to revisit the appraisal of the problem." He implies that overreliance on renewables without acknowledging their limitations could lead to energy insecurity and economic strain.
The Path Forward
Goldman Sachs recommends an "all-in approach" that includes renewables, nuclear, battery storage, carbon capture, and carbon removal. They highlight investment opportunities across this spectrum, suggesting that "Big Tech's all-in approach to low-carbon technology deployment will continue, supportive of upside for Green Capex".
Doomberg, while critical of certain aspects of the green agenda, would likely agree with a diversified strategy that emphasizes practical solutions over ideological purity. His critiques are not against environmental stewardship per se but against policies that disregard physical and economic realities.
Bridging the Divide
The tension between ambitious climate goals and practical energy needs is palpable. Goldman Sachs provides a roadmap that is cautiously optimistic, banking on technological advancements and strategic investments to bridge the gap. Doomberg offers a reality check, reminding us that "the laws of physics are non-negotiable."
The convergence on nuclear energy is noteworthy. Both perspectives acknowledge that without embracing nuclear power, achieving both reliability and low emissions may remain elusive. As Goldman Sachs puts it, "We see nuclear has the potential to meaningfully shift what we expect to be an upward trajectory for data center emissions through 2030 to a flat or declining trajectory in the 2030s".
Conclusion
The energy future is not a zero-sum game between renewables and fossil fuels; it's a complex equation requiring a blend of technologies, realistic assessments, and flexible policies. Goldman Sachs and Doomberg, despite their different lenses, collectively highlight the urgent need to reevaluate our approach.
Doomberg’s thought provoking pieces imply, ever so rationally, a call to action for policymakers, corporations, and citizens alike to ground our energy strategies in practicality without abandoning our environmental responsibilities.
Thank you for reading, liking and commenting on this piece. More to come soon. All reports and articles referenced here are below:
Goldman Sachs, “AI/Data Centers' Global Power Surge” 53 pages. https://iando.s3.ca-central-1.amazonaws.com/GS+SUSTAIN_+AI_data+centers'+global+power+surge_+The+push+for+the+'Green'+data+center+and+investment+implications.pdf
Doomberg, “Storage Units”. https://newsletter.doomberg.com/p/storage-units?r=9kr51&utm_campaign=post&utm_medium=web
Doomberg, “Their Democracy”. https://newsletter.doomberg.com/p/their-democracy?r=9kr51&utm_campaign=post&utm_medium=web
Doomberg, “Shift Shaping”. https://newsletter.doomberg.com/p/shift-shaping?r=9kr51&utm_campaign=post&utm_medium=web