U.S. needs major nuclear power expansion to meet rising electricity demand, Southern Company CEO says

The United States needs to build a significant number of nuclear plants to supply surging energy demand while also meeting climate goals, the CEO of Southern Company said at an event on Thursday.

"This country will need more nuclear plants going forward," Chris Womack said at the Reuters Global Energy Transition conference in New York City.

"It's upwards of 10 large gigawatts of nuclear power that I think we have to have going forward," the CEO said. This is equivalent to about 10 new nuclear plants with a single reactor each. The typical reactor in the U.S. produces about a gigawatt of electricity, according to the Department of Energy.

Based on market capitalization, Southern Company is the second largest name in the Utilities Select Sector SPDR Fund (XLU). It's also one of the largest providers of electricity in the nation, serving millions of people across Georgia, Alabama and Mississippi.

Last year, the Atlanta-headquartered utility completed the first nuclear plant in the U.S. in more than three decades, with the second of two new reactors having started commercial operations in April.

Womack said Southern Company is seeing a level of electricity demand that that the utility has not faced since the advent of air conditioning and heat pumps in the South in the 1970s and 1980s. After two decades of nearly flat power growth, Southern Company is now expecting demand to grow by three to four times, the CEO said.

"A lot of this is dependent and contingent upon what we see with artificial intelligence and all those large learning models and what data centers will consume," Womack said. "You're also seeing in the Southeast, this incredible population growth and you're seeing all this onshoring with manufacturing."

Unit 3's reactor and cooling tower stand at Georgia Power Co.'s Plant Vogtle nuclear power plant in Waynesboro, Georgia, on Jan. 20, 2023.John Bazemore | AP

Atlanta is one of the fastest growing data center markets in the nation, with construction growing by 211% increase to 732 megawatts in 2023, according to the real estate service firm CBRE. Utility stocks have made a comeback in 2024 on the power trend, with Southern Company up 11% year to date.

Womack said 80% of the demand Southern Company is facing between now and the end of the decade will be supplied by renewable energy, but natural gas and nuclear will also play key roles in providing reliable power.

"Nuclear has got to be a big part of this mix, of [the] decarbonization focus as we go forward to make sure we're having the power and the energy and the electricity this economy needs," Womack said.

Nuclear has the advantage of providing reliable electricity without emitting any carbon emissions, while renewables will need cheaper, longer duration batteries before they power facilities like data centers around the clock at commercial scale.

But building new nuclear plants is expensive, and the permitting and construction process is time consuming. The new nuclear reactors that Southern Company built at the Plant Vogtle in Georgia opened some seven years behind schedule and cost more than $30 billion, at least double the original projections, according to the Energy Information Administration.

Not everyone in the power industry is convinced that nuclear is the way forward. AES Corporation CEO Andres Gluski said earlier this month the he thought the "euphoria" over nuclear power is a "little over blown." AES is major supplier of power for tech companies building out data centers.

There is only so much existing nuclear energy that merchant power providers can re-contract to sites such as data centers, Gluski told CNBC. "The question is, going forward, what's the price of new nuclear," he said.

Womack said the government has to put the right incentives in place and ensure that there is a way to mitigate cost overruns in building new nuclear plants. The CEO said developing small modular nuclear reactors is also key. These smaller nuclear plants, which are still under development, are in theory easier to site and not as capital intensive as traditional plants.

GE Vernova CEO Scott Strazik told CNBC Thursday that small modular nuclear reactors will become an important part of the energy mix. The company will commission a small modular reactor in Ontario, Canada in 2029.

"Small modular reactors are going to become a much bigger piece of the equation," Strazik told CNBC's "Squawk Box" at the Aspen Ideas Festival. "No question it will be."