Nuclear power is 'overblown' as an energy source for data centers, power company CEO says

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President and Chief Executive Officer (CEO) of the AES Corporation Andres Gluski speaks during an interview with Reuters in Santiago, Chile June 4, 2019. Picture taken June 4, 2019. Rodrigo Garrido | Reuters The euphoria over nuclear energy as a power source for data centers is "overblown," the CEO of a major power provider for large tech companies told CNBC in an interview Monday. AES Corporation CEO Andrés Gluski said renewable energy is the future, though natural gas will also play a role as a transition fuel. Nuclear power, on the other hand, faces challenges in meeting the growing power demand from data centers, Gluski said. AES is a major power provider for large tech companies building out data centers, with more than 40% of its 12.7 gigawatt backlog coming from customers including Amazon, Microsoft and Google, according to its most recent earnings presentation to investors. Some Wall Street analysts have predicted a nuclear renaissance as power demand increases thanks to artificial intelligence, data centers, re-industrialization and the electrification of the vehicle fleet. Nuclear provides reliable, carbon-free energy, though new projects have long lead times and are expensive. Gluski said the "euphoria" over nuclear power is a "little overblown." There is only so much existing nuclear energy that merchant power providers can re-contract to sites such as data centers, the CEO said. "The question is, going forward, what's the price of new nuclear," Gluski said, adding that only one new nuclear plant has been built in the U.S. in decades and it came in far above budget. 'The future is going to be renewable' The second of two new nuclear reactors at Vogtle Plant in Georgia came online in April, but the project was seven years behind schedule and cost double the original projections, according to the Energy Information Administration. The reactors, operated by Georgia Power, are the first newly-constructed nuclear units built in the U.S. in more than 30 years, according to the Department of Energy. "The Street got ahead of it saying you're not going to build renewables, it's all going be nuclear," Gluski said. "It's going to be natural gas and renewables, but the bulk of it's going to be renewables," the CEO said. AES current gross power generation is 54% renewables, 27% natural gas, and 17% coal. Renewables represent 89% of the company's gross power generation under construction while gas makes up the remaining 11%. Gluski pointed to the recent agreement between Microsoft and Brookfield Asset Management for 10.5 gigawatts of renewable energy between 2026 and 2030 as a sign of the future. Microsoft and Brookfield described the agreement as the largest renewable purchase ever between two corporate partners. "It tells you that's where most of the energy is going to be coming from," Gluski said. "They are cheaper, they are clean and quite frankly easier to site, so the future is going to be renewable energy." Natural gas vs. renewables