Shuttered Iowa Nuclear Plant Seeking Big Tech AI Data Center Deal
A mothballed nuclear power plant in Iowa could get new life thanks to the AI data center boom.
NextEra Energy is looking to land a power deal with one of the world’s largest tech firms that will allow it to restart the shuttered Duane Arnold Energy Center nuclear power plant near Cedar Rapids, Iowa. A deal would add to a growing wave of power purchase agreements between tech firms — whose data center energy consumption has skyrocketed amid an AI data center arms race — and operators of aging nuclear facilities that have become uncompetitive in the commercial power market.
"The recommissioning of Duane Arnold represents an opportunity to return over 600 MW of retired nuclear generation capacity to service," NextEra said in a filing with the Federal Energy Regulatory Commission. "Duane Arnold is one of the last viable nuclear recommissioning opportunities in the United States, presenting a unique opportunity to add new nuclear generation to the grid before the end of the decade."
The 615-megawatt Duane Arnold plant was shut down in 2020, one of 10 U.S. nuclear facilities to cease operations in the past decade. Legacy nuclear plants have struggled to produce power at prices that can compete with cheaper alternatives like renewables and natural gas. More such facilities are scheduled for decommissioning in the coming years or remain viable only through government subsidies.
But now NextEra is changing its plans for Duane Arnold.
The company intends to bring the plant back online by the end of the decade, spending as much as $100M this year to recommission the facility, according to filings with federal regulators.
Late last month, FERC approved NextEra’s request to reconnect the nuclear plant to the power grid as soon as 2028.
NextEra’s newfound belief in Duane Arnold’s commercial viability is tied firmly to surging electricity demand from Big Tech data centers powering artificial intelligence and cloud services.
Over the past 24 months, tech giants like Meta, Microsoft, Amazon and Google have emerged as buyers willing to pay higher-than-market prices for electricity as their data center energy needs intensify. Tech firms aren’t just desperate for power, they’re willing to pay a premium for energy from carbon-free sources like nuclear as the AI building boom makes their ambitious carbon reduction goals less feasible.
As a result, tech giants are increasingly pursuing above-market power purchase agreements with nuclear plant owners that finance the recommissioning of mothballed reactors or avoid their shutdown in the first place.
These dynamics led to a September 2024 power purchase agreement between Microsoft and Constellation Energy that will reopen a deactivated 837 MW reactor at the infamous Three Mile Island nuclear plant in Pennsylvania, the site of a partial meltdown of a different reactor in 1979.
Similarly, Constellation and Meta struck a deal in June that will see the social media behemoth buy all 1.1 gigawatts from a nuclear plant in Clinton, Illinois, allowing the continued operation of a facility that was likely to shut down due to an expiring tax credit.
In early 2024, Amazon Web Services and Talen Energy announced a $650M deal in which the cloud computing firm acquired 1,200 acres adjacent to Talen’s 2.5-gigawatt Susquehanna Steam Electric Station in Pennsylvania. AWS hoped to build as many as 15 data centers on the site powered by nearly a gigawatt of electricity from the nuclear plant next door. The project spurred a series of similar proposals for data centers colocated with nuclear power plants from firms like Constellation, Dominion and Vistra.
Although such colocated projects are on hold due to a November FERC ruling, major nuclear plant operators like Constellation have suggested that more large-scale nuclear PPAs with the world’s largest data center users are likely on the short-term horizon.
In both FERC filings and presentations to investors, NextEra has been explicit in its intent to land a PPA with a major tech company that will allow it to restart its aging Iowa nuclear facility. The firm has told regulators it is in active discussions with potential buyers for the plant's power, which is attracting “significant commercial interest.”
“These are really unicorn-type opportunities,” NextEra CEO John Ketchum said in July on the company’s second-quarter earnings call.
Iowa is already home to several hyperscale data centers, with Google, Microsoft, Meta and Apple all operating large-scale portfolios across the state. ChatGPT was initially trained at Microsoft’s massive complex in West Des Moines, while Council Bluffs is home to a major Google data center cluster.
Cedar Rapids, where the Duane Arnold plant is located, has also emerged as a hyperscale hub. Google is developing a data center complex as part of a $7B investment in the state, while third-party data center provider QTS is building a campus in the city.
On its earnings call, NextEra executives suggested that the firm successfully landing a nuclear power purchase agreement with a major hyperscaler for the Duane Arnold plant would drive a further wave of data center development in the Cedar Rapids area.
“If we’re successful in bringing Duane forward, that obviously creates a hotbed of data center activity around that facility,” Ketchum said.
