Category: Workforce

Data center power demand is accelerating, pushing the grid to its limits and prompting tech giants to bet on next-generation nuclear reactors. But given steep costs, regulatory hurdles, and uncertain scalability, is nuclear the future of data center energy—or just another high-stakes gamble?

At the end of January, Chinese artificial intelligence (AI) startup DeepSeek unveiled two large language models (LLMs)—DeepSeek-R1 and DeepSeek-R1-zero. Unlike previous generations of AI models, DeepSeek’s breakthrough reduced the compute cost of AI inference by a factor of 10, allowing it to achieve OpenAI GPT-4.5-level performance while consuming only a fraction of the power. The news upended future electricity demand assumptions, rattling both the energy and tech sectors. Investment markets reacted swiftly, driving down expectations—and share prices—for power generation, small modular reactor (SMR) developers, uranium suppliers, gas companies, and major tech firms.

Yet, amid the chaos, optimism abounded. Analysts pointed to Jevons paradox, the economic principle that efficiency gains can increase consumption, rather than reduce it. “Our model shows a ~90% drop in the unit cost of compute over a six-year period, and our recent survey of corporate AI adoption suggests increases in the magnitude of AI use cases,” said Morgan Stanley Research. The U.S. remains the dominant market for AI-driven data center expansion, with 40 GW of new projects under development, aligning with a projected 57 GW of AI-related compute demand by 2028. Already, that load is transforming the energy landscape. A recent POWER analysis shows that U.S. data center electricity consumption could reach between 214 TWh and 675 TWh annually by 2030, up from 176 TWh in 2023 (Figure 1).

1. U.S. data center electricity consumption began rising steadily in 2017, driven by an expanding server installed base and the growing adoption of graphics processing unit (GPU)-accelerated servers for artificial intelligence (AI). AI inference workloads and hyperscale data center expansions are expected to increase electricity demand sharply in coming years. Source: Lawrence Berkeley National Laboratory (LBNL 2024 United States Data Center Energy Usage Report)

That has dramatically raised the stakes, igniting a desperate frenzy across both the power industry—which must generate and deliver reliable electricity for a variety of emerging large load consumers—and the data center industry, which is scrambling to procure firm scalable energy to sustain its explosive growth, now and well into the future. The stakes are fueled by real fear. In November, research firm Gartner projected that power required for AI data centers could reach 500 TWh per year by 2027, a 2.6x increase from 2023 levels. It warned that power shortages could restrict 40% of AI data centers by 2027 and drive up energy costs.

The upfront cost of power is no longer the deciding factor for data centers, speakers at the Sustainable Data Centers Summit in Dallas, Texas, suggested in early February. “It’s crazy because we look at like the state of Oregon is about 6 GW, and you have these large hyperscalers [asking] ‘Can I get 6 GW too?’ ” said Mohammed Hassan, senior technical program manager for Amazon Web Services (AWS) Sustainability. Hassan suggested the industry has had to rethink how it approaches energy planning and procurement completely to align with incentives, address regulatory hurdles, and secure long-term reliability. “Solar and wind has taken off in the lead. But if you look at the needs of 2045, in trying to meet the Paris Agreement, solar and wind won’t be enough, so you have to look at what’s the next step.”

At the conference, speakers pointed to potential alternatives that could perform over the short term: natural gas as a “bridge fuel,” carbon capture as a potential future solution, energy storage solutions for flexibility and to promote grid resilience, and renewable diesel as a cleaner backup power option. But to meet long-term goals, the industry is willing to bet on nuclear power for its many benefits—despite the significant challenges that remain.

2. Advanced nuclear firm Last Energy is pursuing a business model that relies on long-term power purchase agreements (PPAs) to finance, build, and operate its fleet of small modular reactors (SMRs). The company in February announced it would build 30 microreactors at a site in Haskell County, Texas, to power data centers across the state.Courtesy: Last Energy

Advanced nuclear developers are overwhelmingly on board. “The overwhelming sentiment nuclear has received from the data center industry is gravitation, not reluctance,” Matt Fossen, vice president of Communications at Last Energy (Figure 2), told POWER. Data center developers recognize that nuclear is uniquely well-positioned to provide the kind of clean energy abundance and 24/7 reliability they need to meet demand. And, in particular, they’re gravitating toward solutions like microreactors because they enable fast delivery, on-site installation, and efficient scalability to meet demand today and tomorrow.”

Why Data Centers Are Turning to Advanced Nuclear

Progress to cement supply to data centers has been fluid over the past year, ushering in a wave of mega-deals, with many more still in development. While many have involved power purchase agreements (PPAs) to procure power from renewables and natural gas power plants, several have focused on existing nuclear plants.

In September, Microsoft and Constellation Energy committed $1.6 billion to restart Three Mile Island Unit 1, now rebranded as the Crane Clean Energy Center, with a targeted 2028 reopening. Other deals are under discussion by Vistra for Comanche Peak in Texas; Public Service Enterprise Group, possibly for Salem and Hope Creek in New Jersey; and Constellation Energy, possibly for Calvert Cliffs in Maryland. Meanwhile, though AWS has sought to expand the Cumulus data center’s load, co-located with Talen Energy’s Susquehanna nuclear station in Pennsylvania, to 480 MW, the proposal was blocked by the Federal Energy Regulatory Commission (FERC), which cited concerns about grid cost allocation and reliability impacts, and the dispute has moved to the U.S. Fifth Circuit Court of Appeals. So far, according to trade group the Nuclear Energy Institute (NEI), 45% of the 95 existing units in the U.S. have expressed interest or planning in data centers, with at least 25 sites looking to fulfil power requirements ranging from 400 MW to 1,920 MW.

Deals have also abounded for advanced nuclear, including SMRs and microreactors, even though their commercial viability hasn’t yet been demonstrated. In September, Oracle announced plans to build a gigawatt-scale data center powered by three SMRs, securing building permits as part of a push to expand its cloud infrastructure. In October, Google signed a pioneering Master Plant Development Agreement with Kairos Power to develop a 500-MW fleet of molten salt reactors by 2035. That same week, Amazon unveiled plans to back 5 GW of new X-energy SMR projects, starting with a four-unit, 320-MWe Xe-100 project in Washington with Energy Northwest, alongside a Dominion Energy partnership to explore a 300-MW SMR near Virginia’s North Anna Power Station. In December, Oklo partnered with Switch, a Las Vegas-based data center designer, builder, and operator, to deploy 12 GW of Aurora powerhouses through 2044 in a historic deal hailed as “one of the largest corporate clean power agreements ever signed.”

“When it comes to producing electricity, I wouldn’t say there’s any one advanced reactor technology that jumps out as being optimized solely for data center applications,” said Patrick White, research director of think-tank Nuclear Innovation Alliance (NIA). “But what we’re seeing is that these reactors have the potential to provide the kind of high-reliability, cost-stable, and emissions-free power that data centers are increasingly seeking.”

The key reason SMRs are gaining traction over larger gigawatt-scale nuclear plants relates to siting flexibility, he explained. Industry is looking at deploying “tens or hundreds of megawatts at a time, which can make it a lot simpler in terms of siting it with whatever demand, wherever the electricity demand actually is,” he noted. But, in addition, he said many of these advanced designs will be engineered to have “a reduced water demand for cooling water or to eliminate the need for cooling water entirely, by looking at things like direct air cooling.” That also opens up a wider range of potential siting options, including the possibility of co-locating nuclear power plants directly with data centers, he noted.

The more concerning question surrounding the integration of advanced nuclear with data centers is whether nuclear can scale fast enough to meet the industry’s growing power demands. The first SMRs from companies like GE Hitachi and X-energy aren’t expected to be operational until 2029–2030, and while microreactors might arrive sooner—around 2027–2028—the scalability of the smaller units remains uncertain.

“The question is not whether nuclear can power data centers—it’s whether data centers are willing to wait for nuclear,” White noted. “Data centers could be nuclear’s first customers, pulling tech to commercialization—but will they commit for the long haul?”

The Data Center Dilemma: Weighing the Nuclear Bet

For Google, Amazon, Microsoft, and other data center developers, owners, and operators, recent nuclear deals or agreements signal clear interest to bolster the burgeoning advanced nuclear market. But they go well beyond reliability, as sources told POWER on the sidelines at the Sustainable Data Centers Summit in February. “It’s not just about doing a PPA and calling it a day,” explained Mohammed Hassan, senior technical program manager for Amazon Web Services (AWS) Sustainability during a fireside chat. “We’re willing to put our money where our mouth is and invest in the development of these technologies because we know they’re going to be critical to meeting our sustainability targets.”

Sources outlined a long list of key attributes that make nuclear an attractive option for data centers, but they also highlighted critical concerns that could hinder adoption.

Why Nuclear Is Drawing Interest

Decarbonization Goals. Nuclear energy provides a carbon-free alternative to fossil fuels and could help data centers meet aggressive sustainability targets and corporate sustainability targets.

Energy Density. AI-driven workloads demand unprecedented power levels, and nuclear’s high energy density makes it an attractive option for scaling capacity without requiring vast land footprints.

Grid Stability. The surge in AI workloads is creating volatile demand spikes, putting significant strain on grids. Nuclear’s steady 24/7 baseload power is seen as a potential solution to grid congestion and reliability issues. One industry expert emphasized, “You have to look at a source that can handle the [power needs], and where we need to go, and nuclear is the most sustainable.”

Long-term Energy Strategy. Nuclear power is seen as a potential solution to meet future energy demands.

What’s Holding Nuclear Back?

Public Perception. Historical concerns over safety, spent nuclear fuel management, and cost overruns continue shaping public resistance to nuclear development and could pose risks or affect siting and permitting for colocated data centers.

Regulatory Hurdles. Advanced reactors face lengthy approval processes that conflict with the data center industry’s rapid growth timelines.

Long Development Timelines. Nuclear projects often face delays and extended construction periods, which may not align with the rapid deployment needs of data centers “You’re looking at 15 to 20 years before you can actually get a nuclear plant up and running,” said one expert.

Technology Readiness. While SMRs show promise, they are not yet widely deployed.

Financial Risks. High upfront capital costs and first-of-a-kind deployment risks make the economics of SMRs uncertain. That has raised concerns about whether nuclear will be cost-competitive in time to meet AI-driven demand.

Grid Integration. As data centers expand, states are reworking utility policies to shift transmission costs onto large-load customers. Some regulatory structures do not yet accommodate nuclear-backed behind-the-meter solutions, adding complexity to grid planning.

Competing Clean Energy Options. Data centers are also exploring other clean energy sources. One expert told POWER: “Most companies are moving towards natural gas because of the flexibility that it offers.”

Skills Gap. The nuclear industry faces a shortage of skilled workers, which could affect the operation and maintenance of nuclear facilities for data centers.

Geopolitical Considerations. Nuclear power involves sensitive technologies and materials, which can complicate international data center operations and expansions.

Addressing the Timing Gap

How advanced nuclear scales up ultimately depends on market risks and scalability challenges, experts told POWER. The most prominent among them, predictably, involves regulatory bottlenecks. While the Nuclear Regulatory Commission (NRC) is shifting toward a more “performance-based and risk-informed” approach, developers remain frustrated by lengthy approval timelines and evolving safety requirements. While high regulatory costs are another considerable consideration, relief may be on the horizon. The NRC recently proposed a dramatic reduction in service fees—slashing them by more than 50%—for advanced nuclear reactor applicants and pre-applicants. The move, designed to incentivize innovation and accelerate next-generation nuclear deployment, proposes a two-tiered hourly rate system, is set to take effect in late 2025.

“The barriers for advanced reactor projects aimed at supporting data center capacity are similar to barriers to advanced reactor development and commercialization more broadly,” Elina Teplinsky, leader of the energy practice at Pillsbury Law, told POWER. “However, there is the added factor of timelines—data center operators need the power today, while it takes a number of years to license, develop, and deploy an advanced reactor, or any nuclear facility.”

So far, the NRC has begun adapting its framework to accommodate smaller, more flexible reactor designs. The approval of NuScale’s site-boundary emergency planning zone (EPZ)—which eliminated the traditional 10-mile evacuation zone requirement—marked a landmark decision that will allow nuclear plants to be located much closer to industrial facilities, including data centers, several experts pointed out.

“NRC already validated a risk-informed methodology for NuScale that allows that developer to adopt an EPZ limited to the site boundary,” Teplinsky explained. “This paves the way for other developers to use methodologies to demonstrate that smaller EPZs will provide the same level of protection to the public as the 10-mile EPZs currently mandated by the NRC for existing plants. This would allow the siting of advanced reactors closer to population centers, including data centers.”

In addition to the NRC licensing issues, regulatory concerns span “contending with the interconnecting utility and state regulations for behind-the-meter generation or the [independent system operators] and interconnection queues if connecting to the grid,” said Baker Botts partner Elaine Walsh. “Some regions are friendlier to these developments than others. Then they may have local water issues to deal with.”

Meanwhile, policy remains a risk. “It’s not clear that policymakers have fully appreciated the challenges with meeting this new expected demand growth, and policy often trails market trends,” noted Eli Hinckley, a partner at Baker Botts. “Uncertainty is a massive hurdle for infrastructure investors—long lives and relatively low yields need certainty as it relates to off-take and policy. An unstable policy position undermines actual investment,” he said.

Permitting is also still evolving—and recently suffered a setback when FERC rejected an interconnection service agreement between PJM Interconnection and Susquehanna Nuclear that would have increased the load sent from the Susquehanna nuclear plant to AWS’s Cumulus data center co-located with the plant. “FERC’s position on interconnection service agreements that allow for direct power sales from nuclear power plants to data centers will be a key permitting issue in the potential co-location of data centers with advanced reactors,” Teplinsky noted. Meanwhile, states like Ohio and Georgia have introduced new policies requiring data centers to cover infrastructure costs upfront. Tha may signal another broad shift in how utilities and regulators plan to manage the financial burden of rapid energy demand growth.

Overall, regulatory complexity will remain a major challenge, several sources suggested. “Developers face technical, political, and regulatory hurdles, including NIMBYism and complicated processes for securing state and federal permits to build new nuclear facilities,” law firm Vinson & Elkins told POWER. The law firm, however, noted that critical issues are partially addressed in the bipartisan ADVANCE Act, passed in 2024, which directs the NRC to streamline licensing, cap fees for advanced reactor applicants, and accelerate approvals for coal-to-nuclear conversions. The law also expands funding for workforce development, strengthens domestic nuclear supply chains, and mandates a faster permitting framework. And, as notably, it introduces prizes to incentivize first-of-a-kind reactor licensing. Those measures, designed to ease financial burdens and spur deployment, are slated to cover NRC fees for the first advanced reactor to secure regulatory approval for flexible operations, nonelectric applications, or the use of spent nuclear fuel.

Behind-the-Meter Nuclear: A Direct Power Solution?

A much-explored approach gaining traction as hyperscalers seek dedicated, reliable, and carbon-free power to meet AI-driven energy demand involves behind-the-meter (BTM) configurations—the so-called “colocation” option in which load co-colates with a generator that is interconnected to the grid, but is situated behind the generator’s meter. Compared to traditional power purchase agreements (PPAs), where electricity flows through transmission and distribution networks, a BTM setup connects the data center and power plant on site. In the case of nuclear power, this means a data center could draw electricity exclusively from a co-located nuclear plant, rather than purchasing power from the broader transmission system.

A key advantage cited by data centers is that BTM integration offers cost efficiency, generally because they eliminate transmission and distribution charges, but also because they could potentially bypass wholesale power markets, and offer more energy security by shielding data centers from grid congestion, price volatility, and curtailment risks associated with renewable-heavy grids. In addition, proponents argue that co-locating data centers with advanced nuclear could allow faster deployment, given that facilities can be built closer to the load center without lengthy transmission upgrades. However, this comes with a risk: if the nuclear plant goes offline, the data center must rely on on-site backup power, as grid service may not be immediately available.

For now, BTM arrangements remain under considerable regulatory scrutiny. Maryland’s Senate Bill 1 (SB1) is actively assessing how colocated projects at the Calvert Cliffs Nuclear Plant would impact ratepayers and grid stability, while Texas, through Senate Bill 6 (SB 6, filed on Feb. 12), is exploring the costs and planning required for integrating massive loads like data centers. If passed, SB6 could impose new requirements on large BTM loads after December 2025, including mandatory transmission charges, financial commitments, and potential deployment of on-site backup generation, and observers suggest it could make BTM arrangements with advanced nuclear more expensive and administratively complex.

At the federal level, the Federal Energy Regulatory Commission (FERC) is moving swiftly to define how co-location fits within wholesale electricity markets, particularly in the PJM region. On Feb. 20, FERC initiated a show cause proceeding directing PJM and its transmission-owning utilities to propose tariff changes that govern the rates, terms, and conditions for co-location arrangements. While PJM has projected a dire need for more than 30 GW of additional peak load over the next five years, FERC’s intervention seeks to address critical questions around jurisdiction, cost causation, reliability, and capacity market participation. If FERC imposes new transmission or market requirements, it could alter the economics of BTM nuclear projects, potentially affecting financing models and deployment timelines. From a grid perspective, PJM has flagged concerns over planning and reliability risks. While traditional network loads are integrated into long-term planning, BTM configurations can create blind spots, as they aren’t accounted for in regional capacity planning, it says.

According to a February 2025 paper from Duke University’s Nicholas Institute for Energy, Environment, and Sustainability, additional considerations must be weighed when evaluating BTM nuclear projects. One key factor is load flexibility —large colocated loads, such as AI data centers, could be required to provide grid services, such as demand-side response, to help maintain system reliability. The paper also highlights grid utilization impacts, noting that while some BTM loads may avoid grid transmission charges, they may still impose costs on system planning and resource adequacy. Additionally, it warns, market pricing structures may shift, potentially forcing BTM users to contribute to shared grid infrastructure costs. Uncertainties also extend to technical and operational aspects, given that SMRs and microreactors remain untested at scale for continuous high-demand applications. Hybrid models—where BTM nuclear remains partially grid-connected for redundancy—could require new regulatory frameworks to establish pricing, reliability obligations, and backup provisions, it notes.

Emerging Business Challenges

Still, beyond regulations, the actual business of running co-located nuclear plants remains uncertain. While recent discussions highlight tech companies as potential investors in advanced nuclear facilities, data center sources confirmed most aren’t attracted to the prospect of owning and operating nuclear plants.

“Data center operators are not in the business of running power plants,” said Walsh. “They want reliability and cost certainty, but they don’t want to deal with regulatory oversight, fuel procurement, or reactor maintenance.”

For now, long-term PPAs look like the preferred model. “Looking across all fuel and technology types, we’re seeing a variety of structures to accommodate data center load, including PPAs and retail energy supply agreements, as well as data centers, hyperscalers, and real estate developers actually taking equity in these projects,” she added. “I would expect fewer data center and real estate developers will be holding equity in nuclear assets.”

Teplinsky, however, noted that along with recent tech giant investments in nuclear development, some companies are exploring partial ownership stakes to secure guaranteed energy supply. “Deals with hyperscalers also present an opportunity to secure some equity investment into these projects,” she said. “The demand from data centers is less a barrier than an opportunity—it allows developers to secure firm and bankable offtake for these projects—potentially at a premium.”

From an operational standpoint, co-located facilities can pose new risks, as Nina Sadighi, professional engineer and founder of Eradeh Power Consulting told POWER. “Who’s going to insure these plants?” she asked. “That’s a huge unknown. Right now, insurance providers are hesitant because of the regulatory and operational complexity. The traditional nuclear liability structures are built around large reactors with established operational histories, and when you introduce something novel like SMRs or microreactors, you’re dealing with a very different risk profile.”

Sadighi, though generally optimistic about nuclear’s suitability for data centers, also pointed to potential workforce-related challenges that hinge on timely deployment. “If we train nuclear workers now, but deployment gets delayed, those workers won’t wait around,” she said. “The nuclear workforce pipeline is not like a tech workforce, where people can pivot between roles quickly. These are specialized skills that require years of training, and if there’s uncertainty about job stability, we risk losing them to other industries entirely,” she said. Sadighi also raised concerns about the stringent operational protocols that add to labor inefficiencies.

Finally, while the data center industry isn’t solely bent on economics—and told POWER sustainability with a long-term vision is a bigger priority—scaling up will require significant investment. That has sparked all kinds of debate. Lux Research estimates first-of-a-kind (FOAK) SMRs could cost nearly three times more than natural gas ($331/MWh versus $124/MWh) and more than 10 times more when factoring in cost overruns and delays. The firm projects SMRs won’t be cost-competitive before 2035. “Cheap nuclear just isn’t in the cards in the next two decades,” it says.

However, a recent Idaho National Laboratory study suggests costs could decline as SMRs move to Nth-of-a-Kind (NOAK) production. It suggests modular construction, factory fabrication, and standardized deployment could drive efficiencies, potentially reducing costs as more units are built. Notably, the study describes an “economies-of-scale penalty crossover point” where SMRs achieve cost parity with large reactors if enough units are deployed. Deploying four 300-MW SMRs could drop costs by 20% compared to a single 1,200-MW reactor, it suggests. For now, the first real-world test of this cost curve will be Ontario Power Generation’s BWRX-300 SMR fleet, which is expected to start operating by 2029.

The fundamental debate is rooted in several uncertainties—which is not uncommon for emerging sectors, experts also generally pointed out. “Tax credits—especially the clean electricity production tax credits and investment tax credits—will be vital to the commercial viability of these projects, especially considering the FOAK risk,” said Teplinsky. “DOE [U.S. Department of Energy] loan guarantees and direct financing from the Federal Financing Bank at low rates are also essential to companies’ ability to secure debt and reduce cost of capital. Grant funding to support commercial demonstrations and high-assay low-enriched uranium support are also key.”

However, Teplinsky cautioned that these incentives were in place before AI-driven data demand soared. “[T]hey will need to remain in place in order for data center-driven advanced reactor projects to be viable,” she said. “In fact, these incentives need to expand and address some of the key issues still inhibiting large-scale advanced reactor deployment despite data center demand, such as FOAK deployment and cost overrun concerns.”

—Sonal Patel is a POWER senior editor (@sonalcpatel, @POWERmagazine).

The Evolving State of Power Plant O&M

February 23, 2025

Jeff Prescott

asset management Business Digital Transformation electrification energy infrastructure Energy Security Full Coverage grid modernization News O&M operations and maintenance Power power grid reliability power plant efficiency predictive maintenance renewable energy O&M Safety Supply Chains Technology Trends Workforce No Comments

As power plants confront aging infrastructure, surging demand, and the sweeping changes of rapid electrification, operations and maintenance (O&M) are being redefined to tackle unprecedented challenges and seize new opportunities.

In December 2025, the North American Electric Reliability Corporation (NERC), the region’s designated electric reliability organization, issued a sobering assessment of the power sector’s outlook for the next decade. More than half of North America may be at risk of electricity shortages, it warned. The scenario is exacerbated by the accelerated retirements of 78 GW of aging, fossil-fueled capacity—with an additional 37 GW announced but not yet confirmed—and sluggish progress on new resource additions. Compounding the challenge, power demand is projected to soar by 15% over the next decade, driven by rapid electrification, industrial growth, and the increasing energy needs of the data-driven economy.

In this context, the region’s existing fleet will play an outsized role, underscoring a role for their sound operations and maintenance (O&M). However, NERC also flagged forced outages as a critical and growing concern for the power sector, noting that unplanned outages caused by equipment failures, insufficient maintenance, and resource shortfalls pose significant reliability risks, most prominently during extreme weather events. Without robust O&M practices, these issues could further undermine the grid’s ability to meet rising demand, particularly as winter peaks begin to outpace summer peaks. That has exposed new vulnerabilities in resource adequacy planning, it said.

But as experts told POWER, the realm of O&M is itself rapidly evolving to address new complexities and expectations introduced by the rapid transformation. As IHI Power Solutions Director of Business Development Doug Machon notes, O&M emerged historically as a straightforward business function managed internally by utilities operating within regulated monopolies. The realm began a shift in the 1990s, as competition, introduced by electricity deregulation, ushered in third-party O&M services that offered basic maintenance, compliance support, and operational oversight. Today’s landscape adds a growing involvement from private equity investors, a decline in long-term power purchase agreements, and the rise of diversified energy portfolios—including renewables, distributed energy resources (DERs), and hybrid configurations.

No longer limited to routine tasks, modern O&M necessitates “a higher level of expertise and innovation in plant operations,” says Machon. The significant shift has catalyzed “the development of comprehensive O&M strategies designed to maximize efficiency, reliability, and profitability in an ever-changing energy landscape.” Providers today are expected to integrate advanced technologies, foster flexible plant cultures, and navigate stringent regulatory landscapes, he notes. Essentially, O&M today functions both as a critical lever for optimizing performance and enabling grid reliability in an increasingly dynamic energy environment, but it must also simultaneously mitigate risks and seize opportunities, he says.

Tackling New O&M Challenges

According to Ricardo Guerrero, general manager for Global O&M at GE Vernova, O&M advancement varies by region. “It’s different in every part of the world, but I would say the main factor that is affecting O&M services at this moment is the penetration of renewables,” he says. Plunging costs for renewables have ushered in new operational demands for traditional thermal power plants, including combined cycle gas turbine (CCGT) power plants, which were historically designed as baseload workhorses. “Cycling is a big issue,” Guerrero acknowledges. “Cycling is associated with how you are going to react, how you are going to accommodate your team, how you are going to accommodate your strategy, your planning—everything associated to O&M services—to be really productive, take care of cost, and be efficient.”

Cost pressures amid inflation and market demand further compound these challenges. Power sector O&M costs typically fall into fixed costs and variable costs. Fixed costs cover consistent expenses like routine maintenance, staff salaries, and long-term equipment contracts, while variable costs fluctuate based on fuel prices, material needs, and unexpected repairs. Over the past five years, cost fluctuations have hinged emphatically on rising material costs for critical resources such as steel, copper, and silicon, with particular implications for aging thermal power plants that require frequent and costly repairs.

Table 1. A December 2023 U.S. Energy Information Administration (EIA) cost and performance survey conducted by Sargent & Lundy summarizes costs for most technologies, including overnight capital cost information, fixed operating and maintenance (O&M) costs, and variable non-fuel O&M costs. Notes: USC = ultrasupercritical; CTs = combustion turbines; CC = combined cycle; SS = single shaft; BFB = bubbling fluidized bed; MWAC = megawatt alternating current; WTG = wind turbine generator; BESS = battery energy storage system. Source: EIA, Capital Cost and Performance Characteristic Estimates for Utility Scale Electric Power Generating Technologies, January 2024.

Renewable O&M costs, while generally lower than those of thermal power plants, have been steadily decreasing due to technological advances, economies of scale, and experience-driven efficiencies. However, they remain sensitive to material price volatility and the growing demand for specialized maintenance services. Offshore wind, in particular, faces higher O&M costs compared to onshore wind, driven by logistical challenges, harsher environmental conditions, and the need for specialized vessels and remote monitoring systems. Meanwhile, costs for advanced technologies such as biomass and small modular reactors remain comparatively high. A cost and performance analysis conducted by engineering firm Sargent & Lundy compared 19 different technologies based on their capital and O&M costs (Table 1). Even as these emerging technologies promise operational efficiencies and decarbonization benefits over time, their high upfront investments and significant ongoing O&M expenses can pose serious feasibility challenges.

Enduring the Vast Realm of Policy and Regulatory Uncertainties

Still, the current power landscape is compelling more companies to adopt new technologies and approaches. A significant factor has been compliance with the evolving patchwork of government mandates, including regulations and incentives increasingly focused on accelerated decarbonization. The U.S. Environmental Protection Agency’s (EPA’s) April 2025–finalized Carbon Pollution Standards mandate carbon capture and sequestration (CCS) for existing coal units and new baseload combustion turbines, adding to rules regulating nitrogen oxides, mercury, effluent, and coal ash. Regional decarbonization differences and overlapping state-level policies are, meanwhile, creating additional complexity, driving operators to adopt tailored strategies to meet diverse compliance requirements.

Beyond emissions, regulations now also emphasize grid stability and reliability, compelling conventional generators to provide ancillary services such as fast frequency response and inertia. The need for resilience has also generally spurred mandates that require plants to bolster infrastructure to withstand extreme heat and cold events, floods, and droughts. Cybersecurity is another growing focus, with federal directives requiring power plants to implement stricter digital protections and incident reporting protocols.

“You must adapt to the market. If you don’t react, if you don’t change, if you don’t adjust yourself to the new conditions, you’re going to disappear,” notes GE Vernova’s Guerrero. GE Vernova’s approach has been to prepare customers for these transitions, including tailored maintenance strategies. “We take into account the specific operational stresses caused by renewables integration, ensuring that even older assets comply with regulatory thresholds while optimizing performance,” he explains.

Siemens Energy, a global provider of power technology, solutions, and services, shares a similar outlook. “Our O&M service is designed to manage and maintain various types of technology infrastructure or equipment. This approach is especially beneficial in diverse and complex operational settings such as carbon capture, where multiple types of technology coexist,” says Andrew Robson, Siemens Energy’s technical expert for O&M Solutions.

Best Practices for Maintenance in the Evolving Power World

While power plant maintenance is a cornerstone of reliable power generation, designing and maintaining an effective program will require careful consideration of modern challenges and strategies. Engineers at infrastructure solutions firm Gannett Fleming offer some pointers.

Understand Your Assets. Develop a detailed asset register to categorize and document critical assets, including electrical, mechanical, and civil infrastructure. Involve multidisciplinary experts to ensure a comprehensive understanding of maintenance needs.

Develop a Maintenance Strategy. Balance reactive, preventive, and predictive maintenance to address immediate needs while minimizing future risks. Document the rationale for each maintenance task based on regulatory requirements, manufacturer guidance, and risk analysis.

Leverage Technology. Invest in a computerized maintenance management system (CMMS) like Maximo or SAP CMMS to streamline scheduling, documentation, and data analysis, ensuring efficient resource allocation.

Stay Agile. Avoid static programs. Continuously assess and adapt maintenance strategies to reflect advancements in technology, changes in asset conditions, and best practices.

Prioritize Tasks. Prevent over-commitment by ranking maintenance activities based on risk to ensure critical tasks are executed effectively.

Address Challenges Holistically. Be wary of knee-jerk reactions to failures and aim for balanced solutions through root cause analysis and measured troubleshooting.

Foster Collaboration. Streamline decision-making by clearly defining roles while incorporating input from stakeholders to maintain agility in program updates.

“In the next decade, Siemens Energy will continue to offer expert O&M services to manage customer reliability risks, enhance efficiency, and centralize skills for consistent and reliable service supported by data-driven digital technologies,” Robson adds. While the need to decarbonize conventional power generation affects all utilities and is not specific to O&M, the company’s services “ensure that these technologies operate reliably and efficiently, contributing directly to meeting decarbonization goals,” he explains. Additionally, he underscores broader sustainability benefits, particularly through the use of a global network of remote operations and control centers. “Especially during COVID, it became clear that it is not always necessary to fly specialists around the world, but that a lot can be done remotely,” he says (see sidebar “Best Practices for Maintenance in the Evolving Power World”).

Solving the Workforce Puzzle

For now, experts agree the most urgent challenge facing the power sector is the shortage of skilled personnel. “O&M is all about people,” says Guerrero. “People tend to believe that in the future, power plants will be operated completely by robots, but we are really far away from that.” A key issue is that the workforce, traditionally the backbone of power plant operations, is aging, and with that comes the loss of decades of invaluable experience. “At the same time, we’re finding it increasingly difficult to attract younger talent, who are often drawn to tech-savvy industries like software and artificial intelligence [AI] rather than traditional fields like ours. It’s a problem we cannot afford to ignore because, without skilled workers, even the most advanced plants won’t function,” he says. To address these challenges, Guerrero explains that GE Vernova has developed structured knowledge-capture systems, including detailed playbooks created during contract mobilizations. “These are comprehensive guides that ensure when experienced team members retire or move on, their expertise doesn’t leave with them,” he says.

At the same time, GE Vernova, driven by its “lean” business philosophy, has already begun transitioning from traditional reliability-based maintenance approaches to more proactive, data-driven design-making enabled by AI and analytics. Guerrero said the company has developed autonomous robot technology capable of conducting inspections and identifying issues that human workers may miss. Demonstrating these technologies carries operational benefits, but a key intent is to transform the perception of O&M, positioning it as innovative, future-focused, and dynamic—attributes that could be attractive to a younger workforce, he says.

1. Completed in early 2025, the Leipheim Power Plant in Bavaria, Germany, is a cutting-edge gas turbine facility developed by Siemens Energy and German energy giant LEAG to bolster grid stability during renewable energy shortfalls. The plant, capable of ramping up remotely within 30 minutes to deliver 300 MW of power, is operated entirely from Siemens Energy’s ISO-certified Remote O&M Support Center in Erlangen. Courtesy: Stefan Hobmaier/Siemens Energy

Robson echoes Guerrero’s concerns. “Even utilities with extensive experience in power plant operation and maintenance are now seeking our O&M expertise due to the skilled workforce shortage,” he notes. Siemens Energy’s approach has been to double down on technology. “Remote services are key to maintaining reliable operation and efficient maintenance,” says Robson, citing Siemens Energy’s 72-hour unmanned operation of the 300-MW Leipheim Power Plant in Germany (Figure 1). “Our remote monitoring centers handle routine monitoring and data analysis, freeing up experts for tasks that cannot yet be fully automated.”

According to Emily Obenauer, global director of Product Marketing at SiteTracker—a software-as-a-service platform that provides end-to-end asset lifecycle management—emerging tools are also set to play a transformative role in streamlining O&M operations with tangible workforce benefits. “Tools like ours are also shown to increase the satisfaction and increase the effectiveness of those workers out in the field because we’re getting so clear on what needs to be done and validating that that work has been done correctly the first time around,” she said.

Shoring Up Supply Chains

While workforce challenges have long afflicted the sector, more recent global supply disruptions are posing new concerns, prompting companies to reassess the resilience of their O&M operations. Siemens Energy’s Robson notes that, while temporary bottlenecks for parts and consumables remain a concern, “The shortage of people is, so to speak, the biggest bottleneck in the supply chain,” he says. He explains that most original equipment manufacturers (OEMs) proactively approach supply chain challenges to mitigate risks, leveraging global networks for flexibility. “We can access stock that was originally planned for other projects in the longer term. Additionally, close monitoring allows for the identification of required parts at an early stage as part of predictive maintenance,” he says.

2. To bolster its supply chain and prepare for increasing demand for its heavy-duty gas turbines and upgrades globally, GE Vernova moved in November 2025 to acquire Woodward Inc.’s combustion parts business in Greenville, South Carolina. This image shows a 7HA.03 gas turbine at GE Vernova’s own facility in Greenville, where it manufactures and tests gas turbines to provide global engineering support and other activities. Courtesy: GE Vernova

GE Vernova’s strategy is similar, entailing a proactive, collaborative approach with its customers (Figure 2). The company closely monitors its customers’ equipment and provides advance warning of potential failures. In addition, Guerrero says it helps customers pre-position critical spare parts to minimize downtime in the event of an issue. For example, when GE Vernova identified that the generators at a 20-year-old power plant in Taiwan were nearing the end of their life, it advised the customer to purchase a spare stator and rotor in advance. Two years later, the rotor failed, but because the spare part was already on-site, GE Vernova was able to quickly replace the rotor, getting the customer back online in just seven days, he says.

The Rise of Third-Party O&M Services

In another important trend, given modern complexities and evolving risks in the power sector, many utilities and power companies are increasingly turning to value-driven partnerships, often through third-party O&M service contracts. These partnerships encompass project management, robust training programs, detailed plant assessments, and the adoption of tailored best practices to optimize operations. Many are designed to leverage economies of scale and advanced remote operations, providing utilities with cost efficiencies and enhanced reliability in managing diverse energy assets.

“For many plant owners, O&M is no longer a core focus,” Guerrero explains. “Their priority is on generating and selling energy, which opens the door for third-party providers like us to step in with specialized expertise. But it’s not just about taking over operations—it’s about adding value. By leveraging performance-based contracts and advanced technologies, we focus on aligning our services with plant owners’ goals for reliability, efficiency, and profitability.” Guerrero notes that performance-based contracts are increasingly becoming a defining feature of third-party O&M services because they play a pivotal role in aligning incentives with plant reliability, availability, and efficiency. The contracts ensure accountability by incorporating measurable metrics, such as performance guarantees, and often include penalties for underperformance as well as rewards for exceeding targets. “This model ensures that everyone is focused on the same goal: maximizing the plant’s performance,” he says.

Global renewable energy developer Invenergy— a company known for its extensive portfolio of wind, solar, and storage projects—also highlighted the value proposition. The company says it approaches O&M services with an “owner’s mindset,” a philosophy that ensures top-tier maintenance practices and builds trust within their communities. “In addition to prioritizing safety, Invenergy Services’ other O&M pillars deliver benefits to customers through innovation, flexibility, and cost savings,” it says.

O&M’s Future: Tech and Sustainability

According to experts, the future of O&M in the power sector will be shaped by two transformative forces: technological innovation and the global push for sustainability. Already, as power generation grows more complex, modern O&M practices are increasingly integrating cutting-edge technologies like predictive analytics, autonomous systems, and maintenance strategies. “The future of operations and maintenance will heavily depend on integrating AI with digital tools to analyze data in real-time. This allows us to predict issues before they occur, saving costs and improving asset performance across the board,” says Guerrero.

Obenauer echoes this point. “We know that the future lies in digital transformation, and AI is a major focus. By applying AI to fieldwork and O&M processes, we’re already testing how to enhance efficiency and reliability while aligning with the workforce and industry needs.” AI-driven solutions also promise to unlock new opportunities in lifecycle management, she notes. “By centralizing asset data, companies can use AI to optimize resource allocation and focus on long-term asset health while navigating complex operational challenges.”

3. Operational since June 2023, the Kela PV Plant Phase 1, located in Sichuan Province, China, stands as one of the world’s largest hydro-solar hybrid power plants, combining 1 GW of solar capacity with the 3 GW Lianghekou Hydropower Plant. The site exemplifies advanced O&M practices in a challenging environment. Given that it is situated at an altitude of 4,600 meters, the plant endures extreme cold and high winds. Using a smart O&M platform with features like remote monitoring, automated fault detection, and real-time diagnostics, the plant minimizes manual intervention and ensures reliability. Courtesy: Huawei

On the other hand, sustainability will support the general charge toward cleaner energy sources, such as accommodating new technologies and hybrid configurations (Figure 3). Companies are exploring how to integrate emerging solutions such as hydrogen retrofits, thermal energy storage, and batteries into power plants, all while keeping costs low, maintaining reliability, and minimizing environmental impact.

As Guerrero stresses, a key takeaway is that O&M will need to be flexible and responsive rather than rigid. “You can navigate the sea as a cruise ship, or you can be a motorbike on the beach moving quick, and that’s the idea, that’s what we are doing,” he explains. Ultimately, proactivity will be necessary for nimble adaptation to keep pace with the changing landscape, he says.