U.S. nuclear power is gaining traction as a source of power for artificial intelligence and data centers, and Citigroup analysts say regulated utilities such as Duke Energy and Southern Company are the best way to ride on the trend. Data centers are expected to drive 31 gigawatts of incremental power demand by 2030, according to Citi. That in turn will drive increased utilization of the U.S.’s existing 95 nuclear reactors, which represent 102 gigawatts of reliable, carbon-free power generation capacity, analysts told clients in a note on Tuesday. Analysts led by Arkady Gevorkyan told clients: “We believe existing U.S. nuclear power plants can increase production due to higher baseload demand, policy and electricity prices.” The Inflation Reduction Act provides for nuclear power generation between 2024 and 2032. Production tax credit (PTC) of $15 per megawatt hour of electricity generated by the facility. losses to provide income stability. Regulated utilities such as Duke Energy and Southern Company can pass this on to customers through reduced bills or reinvest the tax credit’s cash flow into existing or future capital expenditures. Citi said the tax credits could lead to modest earnings growth that regulated utilities could use to improve their long-term financial prospects. “U.S. regulated utilities with nuclear assets are likely to experience PTC cash flow benefits that gradually increase from 2024 to 2027 before reversing in 2032,” the analysts wrote. “This would occur in the early years. Increases cash flow, helps with financing. Duke Energy has gained 12% in the past three months, while Southern Company has gained 17%. Duke operates approximately 9 GW of nuclear power capacity, while Southern operates 5.4 GW of nuclear power capacity.
