Are Small Nuclear Reactors Coming to Arizona? February 27, 2025

Arizona Utilities Seek DOE Funding for Small Nuclear Reactor Projects

$900 Million Incentive to Go Small

As 2025 began, Arizona’s three largest utilities, Arizona Public Service (APS), Tucson Electric Power (TEP), and the Salt River Project (SRP) sent off a proposal to the Department of Energy for a grant to co-develop a nuclear power plant using small module reactors (SMR) — truck-sized nuclear technology that has been inching its way into the market for years.

And that’s exactly what the offer is about: through this $900 million grant, DOE is hoping to give a clear and rapid boost to these long-ballyhooed compact reactors to keep the power on as energy demand continues to rise.

According to Biden’s DOE, while renewables will play an essential role in the future, decarbonizing the last 20% of the grid would be “very difficult and expensive without firm power,” code for fuel like oil and gas that is grid-ready, night and day, sunny, cloudy or calm.

Nuclear is firm but not a fossil fuel.

The funding, part of the Bipartisan Infrastructure Law (BIL), was among Biden’s final offerings in his administration’s “all-of-government” approach to clean energy and carbon reduction, which resulted in a long-desired focus on confronting climate change.

With climate change research on the chopping block, there is still reason to believe the Trump Administration will keep the nuclear momentum going. Nuclear is included on Trump’s list of favored fuels. Like oil and gas, nuclear is not a renewable. More akin to coal, nuclear power is about mining uranium. No problem there, right? Ask the Navajo.

Not Everyone Is Thrilled by the Prospect

Not everyone is pleased that Biden’s offer was a nuclear solution, including PSR. As a prominent issue, PSR advises that “nuclear weapons aren’t the only nuclear threat to public health. Nuclear power is dangerous to human health, and it is not a source of safe or clean energy.”

Environmentalists and clean energy advocates are concerned. Longtime anti-nuclear activists and publishers of the Nuclear Resister, Jack and Felice Cohen-Jappa, of Tucson, are planning a rally March 11, the 14th anniversary of the Fukushima reactor meltdown in Japan.

“This folly ignores the hazards and hopeless economics of nuclear,” Jack Cohen-Jappa wrote in a letter to Arizona Star, referring to the grant and its appeal to the three utilities.

For Biden, SMRs Could Lead to NetZero in 25 Years

But for Biden, the grant opportunity was a linchpin in America’s re-entry to the Paris Agreement, when he pledged the US would reach Net Zero emissions by 2050.

Meeting that goal has been and probably will continue to be a tough task. So last October, a few weeks short of the presidential election, Biden flipped the switch on SMRs, or what DOE collectively terms Generation III+ nuclear technology.

The program was publicly announced by then-Energy Secretary Jennifer Granholm and while the money can be used for larger nuclear power installations, the overall goal remains the same. Find the teams, fund them, and create a viable market for SMRs.

With a small footprint, prefabricated and ready to install, proponents say SMRs are cheaper, faster to market, and, importantly to utilities, both scalable and grid compatible. They provide about one-third of the energy of a standard nuclear reactor. Reactors at Arizona’s Palo Verde Generating Station, the largest in the country, generate 1400 MW each.

Despite evidence to the contrary and ignoring the implications of the process that uses uranium and plutonium to create the fuel, advocates continue to downplay the obvious — and by experience true — anxiety over health and safety. A report published in 2022 by Stanford University found that the common release (or “escape”) of neurons in the generation process creates an increased amount of radioactivity in the waste stream.

Data Centers and AI Are Taking Over the Grid as We Know It

Demand for power isn’t going to slow down, especially among a select group of high-intensity energy users: the tech giants who require excessive amounts of wattage to power their data centers, mine their bitcoins, speed up and deepen AI searching — and deliver the plentiful rewards of the internet to an ever-hungry, ever-consuming global audience.

Pairing tech with nuclear power is already in the mix. Microsoft and Constellation Energy plan to recommission a nuclear reactor at Three Mile Island in Pennsylvania for a $1.6 billion, 20-year power purchase agreement. Google partnered with Kairos Power of New Mexico last fall to build a fleet of up to seven small modular reactors. Amazon’s on-demand cloud platform, AWS, has a $650 million deal to build a data center next to the Susquehanna Steam Electric Station, a nuclear plant also in Pennsylvania.

Arizona is a star in the burgeoning data-center market with 114 of the super-sized facilities, 95 of which are located in Maricopa County (8 in Pima County, 1 in Santa Rita). Phoenix ranks fourth in the US data-center market and plans are on the books for facilities to serve Meta, Facebook’s parent company; Google; and Microsoft. Also among the energy hogs: the semiconductor sector settling in Pinal County.

For the consumer, their presence is costly. APS, the largest power supplier in the state, pointed to data centers when it increased user rates last year by roughly 8% or about $10.50 a month. It told the Washington Post that future data centers will eat up 55 percent of the utility’s electrical load.

Arizona Legislature Sweetens the SMR Pot by Tamping Down on Regulations

Generative artificial intelligence (AI) is also driving the need for more electricity, with the market in the US expected to grow from $86.9 billion in 2022 to $407 billion by 2030.  

The latest example of just how much energy AI requires is Elon Musk’s controversial AI factory in Memphis, Tenn., which calls “Colossus.” According to NPR, when the supercomputer is up and running full time, the utility serving the city says Musk’s operation alone will require a million gallons of water per day and 150 MW of electricity, enough to power 100,000 homes.

In mid-February this year, a month after the Arizona utilities submitted their application for DOE funding, Arizona House Majority Leader Michael Carbone (R) introduced legislation aimed at accelerating the build out of nuclear-generated power in the state. Good timing.

Passed by the Arizona House Committee on Natural Resources, Energy, and Water and ready for full consideration, HB 2774 “removes bureaucratic hurdles standing in the way of SMR deployment to meet growing energy needs, streamlining the permitting process for utilities and large technology companies with clean, reliable energy,” according to Carbone.

Arizona’s Rural Communities Are SMR-Friendly Markets by Design

In short, the bill fast tracks the installation of multiple SMRs in Arizona counties with populations less than 500,000. That means any of our rural counties, minus Pima and Maricopa, can approve the construction and operation of an SMR basically without restriction or regulatory intervention, if the units are “co-located” with a “large industrial user” like a data center.

It also allows a utility to replace an already existing thermal electric generator, like one producing natural gas, to nuclear without permits or a Certificate of Environmental Compatibility (CEC).

According to APS, the grant application is an initial step “in a larger collaborative effort by the utilities to explore the possibility of adding … nuclear energy in the state.”

With funding in mind, the three utilities suggest that a location could be selected within the next five years with an “operation ready to open by the early 2040s. The DOE will announce the winning teams this summer.