2035 Grid Power: The Race Is On

The relentless power demands of advanced artificial intelligence are pushing major technology firms into a direct competition for the next generation of electricity. This urgent search is accelerating investment and development in both advanced nuclear fission and fusion power startups, setting the stage for a fundamental shift in how the grid is powered. While natural gas has long been the default choice for reliable, around-the-clock energy, its position is increasingly precarious. Recent geopolitical instability, highlighted by attacks on Qatari export infrastructure, revealed the fragility of global supply chains. Simultaneously, soaring demand has created a massive backlog for new gas turbines, with current orders unlikely to be fulfilled before the early 2030s.

These extended delays present a dual risk, threatening the growth plans of data-heavy tech companies and potentially ceding market share for the natural gas industry itself. In the United States, electricity generation currently consumes forty percent of all natural gas. By the time turbine manufacturing catches up, a new wave of competitors plans to be fully operational. Both small modular reactor (SMR) developers and fusion energy ventures are targeting grid connections for their first commercial plants within the next five to seven years, a timeline that directly overlaps with the wait for new gas plant components.

Among the emerging alternatives, SMR startups may hold the strongest position to challenge natural gas. Their designs often refine established fission technology, leveraging physics that has been proven over decades of use. Several companies are aiming for operational reactors before 2030. Kairos Power, which lists Google as a future customer, is constructing its Hermes 2 demonstration reactor after receiving regulatory approval in 2024. Oklo, which merged with a special purpose acquisition company backed by Sam Altman, targets 2028 for its initial commercial operations. Others, like Amazon-backed X-energy and Bill Gates-founded TerraPower, which has an agreement with Meta, are aiming for the early 2030s.

For SMRs to successfully displace natural gas as a preferred power source, they must achieve rapid scale-up to realize the economies of scale central to their business models. This is a formidable challenge, yet tech companies are demonstrating significant confidence through direct investments and power purchase agreements for gigawatts of future capacity.

The other frontier attracting corporate interest is nuclear fusion. While less proven than fission, fusion promises abundant power using fuels derived from seawater. Startups in this space are also targeting the early 2030s for deployment. Commonwealth Fusion Systems plans to start its demonstration reactor next year, with its first commercial plant, the 400-megawatt Arc reactor, expected in Virginia in the early 2030s. Inertia Enterprises, a newer venture, hopes to begin construction on a grid-scale plant in 2030 using a design based on the National Ignition Facility’s breakthrough technology.

Perhaps the most ambitious timeline belongs to Helion, another Altman-backed startup. It is racing to build its first commercial plant, named Orion, by 2028 to supply power to Microsoft. The company is also reportedly negotiating to provide OpenAI with up to 5 gigawatts by 2030 and 50 gigawatts by 2035. Achieving this would require an unprecedented construction sprint of hundreds of reactors. For context, the entire U. S. added 63 gigawatts of new generating capacity from all sources last year. Helion’s success could single-handedly reshape the energy landscape.

The ultimate challenge for all these technologies, including natural gas, is cost competitiveness. SMR ventures are betting that mass manufacturing will drive down expenses, but this remains unproven. Current nuclear power is among the most expensive new generation options. Fusion faces similar scale-up hurdles with even greater technical unknowns. New natural gas plants, while currently cheaper, have seen prices rise, potentially narrowing the gap with new nuclear options.

However, all these sources may face stiff competition from renewables paired with storage. The costs of wind and solar have plummeted, with solar continuing its downward trend. Grid-scale batteries are being deployed at record levels, with 58 gigawatt-hours installed last year. Even without subsidies, solar-plus-storage projects now deliver power at a cost that overlaps with natural gas, fission, and projected fusion prices.

This competition is intensifying with next-generation long-duration energy storage technologies. New designs specifically for the grid, such as Form Energy’s iron-air battery and XL Batteries’ organic fluid system, avoid expensive critical minerals like lithium and cobalt. These innovations promise to drastically reduce the cost of storing energy for days or weeks, potentially making a compelling economic case that undermines traditional baseload generation altogether.