On Monday, November 4 — the day before Election Day – many nuclear power stocks were in the dumps. The sharp declines in their stock value had almost nothing to do with the federal election — but everything to do with federal bureaucrats and, quite possibly, the influence of utilities Exelon and American Electric Power.

CNBC reported that the Federal Energy Regulatory Commission (FERC) denied a request by electric power utility Talen Energy to increase the amount of power one of its nuclear plants in Pennsylvania supplies to a nearby data center operated by Amazon. Exelon and AEP had lobbied against the Amazon-Talen deal.

The grid operator PJM Interconnection and the Susquehanna, Pennsylvania, plant which Talen owns had asked to increase the amount of power going to the Amazon data center from the current 300 megawatts (MW) to 480 MW.

Amazon share prices fell 1.6% and Talen stock fell 4.5% within hours. The stocks of other, more speculative, nuclear energy companies that had been riding a wave of enthusiasm for nuclear power took even bigger hits.

Stock for small modular reactor inventor NuScale Power, for example, fell by 4.6%. Nuclear fuel recycler and would-be nuclear power plant operator Oklo lost 6%. Nano Nuclear Energy, which is developing yet another type of nuclear microreactor, was hit with a 10.1% drop.

The FERC decision, many fear, could cripple data centers’ ability to access sufficient electric power to operate the energy-sucking artificial intelligence platforms that have grown exponentially since the introduction of ChatGPT last year. On average, each ChatGPT query requires nearly 10 times as much electricity to process as a traditional Google search. Goldman Sachs Research has estimated that data center power demand will grow 160% by 2030.

Despite the outgoing Biden Administration’s promises, intermittent wind and solar cannot come close to meeting this fast-growing energy demand. This realization has become a major driver of a renewed interest in small modular reactors and microreactors to serve these giant data centers.

One of the first out of the gate was Microsoft, which last month announced a 20-year deal with Constellation Energy that will require restarting the long-shuttered Unit 1 at the Three Mile Island nuclear power plant. Yet the FERC decision, which came just after three new Biden appointees took office at the regulatory agency. And it will be three years before President-Elect Trump could materially change the composition of the Commission.

David Rosner, a former Democratic staffer for the Senate Energy and Natural Resources Committee, became a FERC Commissioner in June for a term ending in June 2027. Lindsay S. See, the former Solicitor General of West Virginia, also joined in June for a term ending in June 2028. Judy Chang, the former Undersecretary of Energy and Climate Solutions for Massachusetts, came on board in July, for a term ending in June 2029.

The FERC decision, based on their view that Talen’s allocation of additional power to Amazon “could have huge ramifications for both grid reliability and consumer costs,” focused on Talen’s desire to co-locate a data center next to an existing nuclear power plant. NuScale, Oklo, and Nano Nuclear are developing small or micro nuclear reactors that can be co-located next to existing data centers – where the need for additional electric energy is urgent.

The decision took place three days after a FERC technical conference addressing costs and reliability concerns related to the unprecedented growth of energy-intensive data centers adjacent to U.S. powerplants. FERC Chairman Willie Phillips, a Biden appointee, had stated that “the federal government, including this agency, should be doing the very best it can to nurture and foster their development.” And then FERC lowered the boom on Talen and Amazon.

The FERC commissioners worried what might happen if a powerplant serving a data center suddenly went offline. “Does the customer get to still draw power from the grid? Because if it does,” said Commissioner Mark Christie, the lone Trump appointee, “that’s going to have a huge impact.”

The FERC commissioners are considering establishing guidelines for co-located data centers, including ones that would determine who is responsible for transmission and distribution upgrade costs and how agreements for data centers are to be governed. That two energy giants (and possibly others) could thwart these nuclear startups could set a sad precedent that even a nuclear-friendly Trump Administration might not be able to undo.

On the other hand, Constellation and Vistra, which has also been working on an agreement to provide nuclear power to data centers, are large, fully functional electric utility operations drawing power from nuclear, solar, natural gas, and other sources. Moreover, Talen may win a potential court case to overturn the FERC decision.

On the other hand, NuScale, Oklo, and Nano Nuclear are startups still working on reactor development and eventual placement, and the threat that their vision for co-located power plants may be thwarted by a hostile federal agency has had an impact on the investment community, which up to now had been very bullish on these companies.

Nano Nuclear CEO James Walker was not surprised at the hesitancy of federal regulators to question the impact of tech industry energy needs on ordinary consumers’ reliance on the grid. But that is a major reason why his company and others are working on developing SMRs and microreactors. Their reactors will provide dedicated, off-grid electric power to supply the needs of these behemoths.

In the short run, said Walker, until these next-generation small and micro reactors are brought online, data centers and other energy users will be using natural gas, hydroelectric power, maybe even coal, and also attempting to buy more electricity from a national power grid already taxed to the max and facing increased demand from battery-electric vehicles and a phase-out of natural gas energy in many states.

Thus, any FERC guidelines that address data centers’ usage of grid-supplied electricity should have zero direct impact on the dedicated small and micro nuclear powerplants that Nano Nuclear and other SMR and micro reactor companies intend to provide. Indeed, the concerns raised by the FERC commissioners ought to provide additional impetus for clearing the regulatory hurdles that these startup companies now face.

Best of all, if the big data centers win their battle to utilize nuclear energy, it could spark rapid growth in the SMR and micro nuclear industry, which provides carbon-free electric power 365/24 without the need for as-yet underdeveloped and inefficient battery storage.

These smaller nuclear facilities could dramatically lower costs for mining and other operations in remote areas, provide reliable electric power to communities in developing nations that today lack reliable, affordable electricity (or any electricity at all), and replace still-needed polluting powerplants that serve numerous communities in the U.S. and abroad.

Oklo’s Aurora microreactor, for example, is housed in an A-frame building with a roof equipped with solar panels that power the facility’s control panels and monitoring system. It also features waste heat utilization components that enable 90% efficiency as the heat is transferred to secondary systems through heat exchangers. Oklo’s vision is to deploy microreactors in remote areas, military installations, isolated and remote countries, and research outposts.

Hopefully, any forthcoming FERC guidelines would pertain only to data centers that buy electricity from the grid and not to dedicated SMR and micro nuclear facilities.