Italian energy giant Enel is placing a bet on small modular nuclear reactors through a partnership with Ansaldo, another Italian energy company, and Leonardo, a defense contractor. The new company is expected to be announced in the coming days.

Enel already has a deal with small modular reactor startup Newcleo to develop so-called fourth-generation nuclear reactor technology. The new Enel-Ansaldo-Leonardo endeavor and the deep pockets of its backers could put additional pressure on other small modular reactor (SMR) startups that have struggled to build power plants. Enel’s global revenue alone is equivalent to about 4% of Italy’s GDP.

A slew of new companies have emerged over the last decade to commercialize smaller reactors. Most of today’s new reactors are large, capable of supplying 1,000 megawatts of electricity, and they take years to build, frequently blowing past their budget estimates. SMR startups, on the other hand, have bet their businesses on mass production and speedy installations.

Still, none of those startups have built a commercial-scale reactor. Several are still in the design phase, and those that have emerged from it have run into roadblocks: Oklo had its permit application denied by the Nuclear Regulatory Commission in 2022, NuScale’s first contract was canceled in January, and X-Energy’s reverse merger failed in 2023.

Yet as electricity demand for AI data centers has jumped, tech companies have bet that this new wave of nuclear companies can slake their thirst for power. Amazon, Microsoft, and Google have all placed bets on nuclear power in recent months.

This same logic has Enel and its partners pursuing new nuclear. Flavio Cattaneo, Enel’s CEO, has said that the company has received between 40 to 50 letters of interest from parties hoping to build data centers in Italy. Until recently, nuclear power in Italy was off the table, as the Italian electorate twice voted against nuclear power plants, once in 1987 and again in 2011. But the current government has said it plans to draft new rules by the end of this year to lift the ban.

The three companies have been toying with some form of collaboration for years. Leonardo is working with Enel to generate more of its own power, while Enel and Ansaldo signed an agreement in March to explore SMR technology. Also in March, Newcleo paired up with Enel. (Ansaldo was formerly owned by Leonardo, then known as Finmeccanica; the two split in 2013.)

For now, Enel is moving cautiously: Cattaneo said SMR power plants are about 10-15 years away, something that jibes with the timelines for several other SMR companies. Startups will have to contend with a deep-pocketed competitor, but at least they’ll have a little breathing room.

Italian energy giant Enel is placing a bet on small modular nuclear reactors through a partnership with Ansaldo, another Italian energy company, and Leonardo, a defense contractor. The new company is expected to be announced in the coming days.

Enel already has a deal with small modular reactor startup Newcleo to develop so-called fourth-generation nuclear reactor technology. The new Enel-Ansaldo-Leonardo endeavor and the deep pockets of its backers could put additional pressure on other small modular reactor (SMR) startups that have struggled to build power plants. Enel’s global revenue alone is equivalent to about 4% of Italy’s GDP.

A slew of new companies have emerged over the last decade to commercialize smaller reactors. Most of today’s new reactors are large, capable of supplying 1,000 megawatts of electricity, and they take years to build, frequently blowing past their budget estimates. SMR startups, on the other hand, have bet their businesses on mass production and speedy installations.

Still, none of those startups have built a commercial-scale reactor. Several are still in the design phase, and those that have emerged from it have run into roadblocks: Oklo had its permit application denied by the Nuclear Regulatory Commission in 2022, NuScale’s first contract was canceled in January, and X-Energy’s reverse merger failed in 2023.

Yet as electricity demand for AI data centers has jumped, tech companies have bet that this new wave of nuclear companies can slake their thirst for power. Amazon, Microsoft, and Google have all placed bets on nuclear power in recent months.

This same logic has Enel and its partners pursuing new nuclear. Flavio Cattaneo, Enel’s CEO, has said that the company has received between 40 to 50 letters of interest from parties hoping to build data centers in Italy. Until recently, nuclear power in Italy was off the table, as the Italian electorate twice voted against nuclear power plants, once in 1987 and again in 2011. But the current government has said it plans to draft new rules by the end of this year to lift the ban.

The three companies have been toying with some form of collaboration for years. Leonardo is working with Enel to generate more of its own power, while Enel and Ansaldo signed an agreement in March to explore SMR technology. Also in March, Newcleo paired up with Enel. (Ansaldo was formerly owned by Leonardo, then known as Finmeccanica; the two split in 2013.)

For now, Enel is moving cautiously: Cattaneo said SMR power plants are about 10-15 years away, something that jibes with the timelines for several other SMR companies. Startups will have to contend with a deep-pocketed competitor, but at least they’ll have a little breathing room.