Main Menu
As artificial intelligence (AI) technologies gain widespread adoption among businesses and consumers across the world, the energy required to power the data centers behind them is increasing at an unprecedented pace. This issue is exceptionally challenging in California, a leader in both tech innovation and decarbonization policy.
As the state’s electricity demand soars from the rise in AI, California confronts a critical question: how can it meet surging energy needs while remaining on track to achieve its clean energy goals? One potential answer that is being recognized by policy leaders is nuclear energy.
AI systems require enormous amounts of electricity to support their computing power. According to a 2025 report from the International Energy Agency (IEA), data centers consumed roughly 1.5% of global electricity in 2024, and AI energy demand is projected to more than double by 2030.
California, home to many of the world’s largest tech companies, is experiencing rapid growth in its data center footprint, placing additional strain on an already stressed electric grid. Renewable power remains central to California’s clean energy strategy, but additional resources are needed to support the grid during peak usage periods. Balancing the growth of AI with the state’s commitment to 100% clean electricity by 2045 requires serious consideration of all available clean energy technologies, including nuclear power.
Unlike wind and solar, and similar to hydrogen energy, nuclear energy provides steady, round-the-clock baseload power. Nuclear production emits no greenhouse gases, making it one of the few scalable clean energy sources available today. As California seeks to decarbonize its grid and maintain reliability, nuclear offers several compelling benefits:
The nuclear power industry has faced high hurdles ever since the partial meltdown of Pennsylvania’s Three Mile Island power plant in 1979 that shook public confidence in the industry. Although this incident resulted in only limited radioactive release and no immediate deaths, public opposition surged, regulatory scrutiny intensified, and construction costs for new plants increased significantly due to more stringent safety requirements. Another major issue facing the nuclear industry is the lack of a permanent repository for high-level radioactive waste leading to accumulation of such materials at sites across the country. The proposed federal Yucca Mountain site in a geologically stable location in Nevada has been stalled for decades due to political opposition and environmental concerns.
Change may be coming related to storage. On June 18, 2025, the U.S. Supreme Court issued its opinion in Nuclear Regulatory Commission et al v. Texas et al, No. 23-1300 (“NRC v. Texas”), which held that Texas and a private party did not have standing to seek judicial review of the Nuclear Regulatory Commission (“NRC”)’s decision to grant a renewable 40-year license to Interim Storage Partners to build in Andrews County, Texas, a “consolidated interim storage facility” to store up to 40,000 metric tons of spent nuclear fuel rods. For context, there are currently about 100,000 metric tons of used nuclear fuel in temporary storage across the country.
The Court’s procedural decision means that the facility at issue now has obtained the required NRC license, at least for an initial phase of 5,500 metric tons. The Court noted that while federal law has long designated the Yucca Mountain as the permanent storage solution, it has “caused significant political controversy and has stalled.” Therefore, to fill the void, this private off-site storage facility was proposed and permitted over significant public opposition.
Yet this may not be the ultimate solution. The facility is likely to continue to face public opposition, particularly as it seeks to expand to its planned total of eight phases. Meanwhile, the U.S. Government Accountability Office has indicated that the amount of spent nuclear fuel stored at nuclear power plants across the country continues to grow by about 2,000 metric tons a year.
Against the backdrop of this troubled history, California effectively has a moratorium in place for any new fission reactors under Public Resources Code Sections 25524.1 and 25524.2, which prohibits new nuclear reactors until the “United States through its authorized agency has approved and there exists a demonstrated technology or means for the disposal of high-level nuclear waste.” California law also requires that a state commission approve a study permitting new facilities and the state legislature must then not disapprove of the commission study. The Supreme Court’s decision in NRC v. Texas could eventually result in a built storage project that meets these California requirements, perhaps leading to the reconsideration findings necessary for a new project in California. Still, the process required in state law is not automatic, and significant hurdles remain before final construction of a facility in Texas is completed.
At the same time, the urgency of the state’s decarbonization goals and the inevitable growth of AI are starting to create momentum for reform of the state’s strict regulatory framework even in advance of the completion of the Interim Storage Partners Texas project or something similar. Assembly Bill 305 (2025) was introduced in January and notably would exempt development of a “small modular reactor,” defined to mean “a nuclear reactor with an electrical generating capacity of up to 300 megawatts per unit.”
An additional sign of this potential reconsideration by policymakers involves Diablo Canyon, the last remaining nuclear power plant in California. It was initially slated to be decommissioned by 2025. In 2022, Governor Newsom signed Senate Bill 846, extending the operational life of Diablo Canyon through at least 2030. This legislative pivot reflected a recognition among lawmakers that California cannot meet its energy needs or climate commitments without the additional zero-carbon power resources that nuclear energy offers.
At the federal level, support for nuclear energy is clearly accelerating. On May 23, 2025, President Trump announced a sweeping initiative to quadruple domestic production from 100 gigawatts to 400 gigawatts by 2050. This Executive Order is intended to reduce regulatory barriers, speed up permitting, and facilitate rapid deployment of advanced nuclear technologies.
Regarding AI data centers, the U.S. Department of Energy has designated AI data centers as critical defense facilities and tasked the Secretary of Energy with utilizing all available legal authorities to site, approve, and authorize deployment of advanced reactors to power them. Further, DOE is required to identify the “groundwork for building and operating an advanced nuclear reactor supporting AI or other critical infrastructure no later than October 2027.”
California is in a uniquely difficult position as it faces homegrown technological innovation with AI and supporting data centers with high energy usage that are at odds with its climate goals. As AI continues to reshape the global economy, the state must continue to develop a diversified energy portfolio capable of sustaining rapid growth in energy consumption, including growth in the AI sector. Nuclear power sources, such as small modular reactors that are co-located with AI data centers, may be the ideal complement to renewables resources and provide the state with a realistic path to achieving clean, reliable electricity at scale.
However, permitting likely controversial new facilities—such as a small modular nuclear reactor—are always difficult in California because of the California Environmental Quality Act, and many other state and local laws that can limit or prohibit even generally non-controversial developments. That being said, state lawmakers have in the past provided alternative permitting processes for clean energy projects through the California Energy Commission under Assembly Bill 205 (2022) —notably excluding nuclear energy—and perhaps as a start could be open to an expansion of this process for small modular nuclear reactors.
Our Energy, Land Use, and Environmental practice groups continue to monitor state and federal developments in the nuclear sector. We are available to assist clients across all phases of energy project development, from permitting and compliance to strategic planning and infrastructure integration. Please contact us to learn how evolving nuclear energy policy may impact your business or investment strategy.
Patrick Ross, Senior Manager of Marketing & Communications
EmailP: 619.906.5740
Suzie Jayyusi, Events Planner
EmailP: 619.525.3818
