Nuclear startup Oklo has signed a massive deal with data center operator Switch to provide 12 gigawatts of electricity by 2044, but the agreement comes with significant caveats. Under the terms of the deal, Oklo will build and operate small modular reactors (SMR) to generate power for Switch's data centers, which serve a range of major companies including Google, Nvidia, Tesla, and JP Morgan Chase.

The deal is a significant milestone for Oklo, which has been backed by Sam Altman, the founder of Y Combinator, since its seed round in 2015. Altman serves as Oklo's board chair and has invested in the company through his blank check company, AltC. Despite the optimism surrounding the deal, Oklo still faces significant hurdles, including the need to secure approval from the Nuclear Regulatory Commission (NRC).

Oklo's previous application to the NRC was denied in 2022, and the company is still waiting for approval. The agreement with Switch is not binding, and much depends on Oklo's ability to secure NRC approval and deliver dozens to hundreds of its SMR power plants. The company plans to resubmit a new application in 2025, hoping that new legislation will speed up the process.

Oklo's first reactor is expected to come online in 2027, but the NRC approval process is notoriously lengthy. The company's previous application was denied nearly two years after submission, and Oklo will need to overcome significant regulatory hurdles to meet its internal deadlines. Even if Oklo receives approval, it will face stiff competition from other nuclear startups, including Kairos, which has already received NRC approval and has a deal with Google to supply its data centers with electricity.

Perhaps the stiffest competition, however, will come from renewable power and grid-scale batteries, which continue to drop in price. Google recently announced a $20 billion renewable power deal that will see the first phase operational by 2026. As the cost of renewable energy continues to decline, Oklo will need to demonstrate the viability and competitiveness of its nuclear power plants to remain a key player in the energy market.

Despite the challenges, the deal with Switch is a significant step forward for Oklo and demonstrates the growing demand for clean energy solutions in the data center industry. As the world becomes increasingly reliant on digital infrastructure, companies like Oklo will play a critical role in providing the power needed to support this growth. Whether Oklo can overcome the hurdles and deliver on its promises remains to be seen, but the deal with Switch is a significant milestone in the company's journey to become a key energy provider for the data center industry.