Small modular reactors (SMRs) are emerging as a potential solution to power the explosive growth of AI data centers, with tech companies and governments committing over $15 billion globally to develop this technology. The global SMR market reached $6.21 billion in 2025 and is projected to surpass $8.76 billion by 2035, driven by industrial decarbonization and surging demand for AI infrastructure. Unlike traditional nuclear plants, these compact reactors can be factory-built and transported to remote locations, making them attractive for powering the next generation of AI facilities spreading across the globe.

Why Are Data Centers Suddenly Consuming So Much Power?

The boom in data center construction has been compared to the 19th-century railroad expansion across the United States, but with far greater financial stakes. AI giants including Alphabet, Amazon, Meta, and Microsoft are collectively expected to spend more than a trillion dollars this year alone on expanding their AI capabilities. This spending translates directly into demand for new data centers, which are prodigious consumers of electricity and water. The scale is staggering: one proposed data center cluster in France would consume the same amount of power as the entire city of New York, or roughly five nuclear power stations.

Hyperscalers spent $443 billion on data centers in 2025 and are projected to spend over $700 billion on specialized data center infrastructure globally in 2026. This explosive growth has created an urgent problem: traditional power grids cannot reliably supply the electricity these facilities demand, forcing tech companies to seek alternative energy solutions. Small modular reactors have emerged as a compelling answer because they offer scalable, baseload power without the massive upfront capital costs and lengthy construction timelines of conventional nuclear plants.

How Are Major Tech Companies Investing in SMR Technology?

The private capital flowing into SMR development reflects the urgency of the power problem. Amazon made a dedicated $500 million investment to accelerate new SMR technology, while Amazon Web Services (AWS) announced plans for a $20 billion investment to integrate SMRs at Pennsylvania energy sites. Constellation Energy committed $1.6 billion to restart the Three Mile Island Unit 1, a historic nuclear facility. These investments signal that hyperscalers view SMRs as essential infrastructure for their AI ambitions.

Beyond direct corporate investments, governments are mobilizing substantial funding. India allocated ₹20,000 crore in its 2025-26 national budget for SMRs, while the U.S. Department of Energy committed $2 billion for TerraPower's Natrium reactor demonstration project. The UK allocated £2.6 billion for Great British Energy-focused SMR projects. Globally, the Nuclear Energy Agency tracked $15.4 billion in SMR financing through late 2025, demonstrating massive international capital commitment to this technology.

Which Companies Are Leading the SMR Market?

Several major players are competing to dominate the SMR space, each bringing different technological approaches and regulatory advantages. GE Hitachi Nuclear Energy leads in commercial viability with their BWRX-300 SMR, which has major deployment projects underway in Canada and Europe, leveraging proven light-water technology to accelerate deployment. NuScale Power became the first company to receive U.S. Nuclear Regulatory Commission (NRC) design certification, with their VOYGR power plant design serving as a global benchmark.

TerraPower, founded by Bill Gates, is positioning itself as a leader in next-generation reactor technology with their Natrium reactor, which utilizes advanced sodium-cooling and integrated energy storage. Their flagship Wyoming demonstration project represents a significant step toward commercial deployment. Rolls-Royce SMR, heavily backed by the UK government, dominates the European market with a scalable, factory-assembled 470 megawatt design that drastically minimizes construction risks and timelines.

What Regulatory Milestones Are Accelerating SMR Deployment?

Regulatory approval has historically been a bottleneck for nuclear projects, but recent policy changes are dramatically accelerating timelines. The U.S. NRC established an 18-to-24-month timeline for pre-approved SMR licensing reviews, significantly faster than traditional nuclear plant approvals. In March 2026, the UK Department for Environment, Food and Rural Affairs justified the Rolls-Royce SMR design, marking a significant regulatory milestone. In December 2025, the Indian Parliament passed the SHANTI Bill, a landmark law that facilitates private domestic nuclear and specialized SMR expansion.

Specific projects are advancing through the regulatory pipeline at an unprecedented pace. The Kemmerer Unit 1 Natrium plant successfully completed an environmental impact statement, while TRISO-X received a Part 70 HALEU Fuel Fabrication License for advanced SMRs. Holtec International filed a phased construction permit for a dual-unit SMR-300 in Michigan, and the Tennessee Valley Authority filed a formal permit for a BWRX-300 SMR at Clinch River. These regulatory approvals represent real projects moving toward commercial operation.

How to Understand the Different SMR Technologies Powering Data Centers

• Light Water Reactors: These dominate the SMR market with 54% market share and use water as a coolant, representing proven, established technology that companies like GE Hitachi are deploying.
• Advanced Cooling Systems: Water remains the most prominent coolant with 58.30% market share, though emerging designs use liquid metal and molten salt for higher efficiency and better heat dissipation in compact spaces.
• Power Output Configurations: SMRs in the 201-300 megawatt range hold 47.60% market share, offering the sweet spot between scalability and efficiency for data center applications.
• Deployment Models: Multi-module deployment accounts for 62% market share, allowing operators to scale power generation by adding reactor modules as demand grows.
• Location Flexibility: Land-based SMRs represent 83.70% of the market, though floating and marine-based designs are emerging for regions with limited land availability.

Where Are Data Centers and SMRs Being Built?

The geographic distribution of data center investment reveals where SMR deployment will likely accelerate. North America currently dominates the SMR market with 49.16% market share in 2025, reflecting the region's established nuclear expertise and regulatory frameworks. However, Asia Pacific is expected to be the fastest-growing region, driven by countries like India, Malaysia, and Singapore investing heavily in data center infrastructure.

Australia is emerging as a potential data center hub, with just 166 data centers currently but new investment in 2024 second only to the United States. Capacity is expected to at least double by 2030. Microsoft has pledged to invest $25 billion in Australian data centers over the next three years, reportedly the largest single investment by a global technology company in the country. Anthropic CEO Dario Amodei visited Australia in April to explore data center infrastructure investments, and OpenAI CEO Sam Altman suggested Australia could become the "data centre capital of the world" due to its abundant clean energy and stable society.

Sam Altman

"When you think about the Asia region, we've got space availability, we've got this huge renewable energy potential, we've got really strong construction workforces that build quickly with high safety records," said Belinda Dennett.

Belinda Dennett, Chief Executive, Data Centres Australia

One proposed project 30 kilometers northwest of Melbourne's central business district would occupy 350 hectares if completed, while in Tasmania, Singapore-based company Firmus is building what it claims is a "$2 billion AI factory" across two sites containing 26,208 chips housed in 364 server racks.

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What Does This Mean for the Future of AI Infrastructure?

The convergence of SMR technology and AI data center demand represents a fundamental shift in how computing infrastructure will be powered. Rather than relying on traditional power grids that are increasingly strained by data center growth, hyperscalers are positioning dedicated nuclear power sources as part of their facility plans. This approach offers several advantages: reliable baseload power independent of weather or grid conditions, lower carbon emissions compared to fossil fuels, and the ability to site data centers in locations chosen for other factors like cooling water availability or proximity to fiber optic networks.

The market dynamics are clear: power generation remains the most prominent application for SMRs, accounting for more than 76.20% of market revenue. However, data center applications are rapidly becoming a primary driver of new SMR development and investment. As AI models grow larger and more computationally demanding, power requirements will only increase, making SMRs an increasingly important component of the AI infrastructure buildout. The companies and countries that successfully deploy SMRs at scale will likely play a significant role in the next decade of AI development.