As AI Drives Unprecedented Electricity Demand, California Can’t Afford to Leave Nuclear Power on the Table

As electricity demand grows from data centers and California’s grid faces increasing strain, a new report released today by the Independent Institute calls on the state to end its 50-year ban on building new nuclear power plants, arguing that the 1976 moratorium is outdated and increasingly incompatible with California’s climate goals.

The report, Ensuring Power Reliability in California: Why the Nuclear Ban Must Go, concludes that the state’s 1976 nuclear moratorium should be lifted, noting multiple areas of unsustainability in California’s energy policy. Among them:

1. Rising AI demand could consume the energy equivalent of three-quarters of the nation’s households: Data center electricity demand is projected to reach up to 35-108 gigawatts by 2030, equivalent to the power consumption of up to 95 million U.S. households, or three-quarters of all homes nationwide, according to U.S. Department of Energy projections. AI data centers alone could account for 6.7 to 12% of total U.S. electricity by 2028, up from just 1.9% in 2018 and 4.4% today.
2. Five states recently lifted their nuclear restrictions based on nuclear power’s proven safety record: The report documents that nuclear power in the U.S. has an exceptional safety record. The 1979 Three Mile Island accident—the most significant nuclear incident in U.S. history—resulted in no deaths and no unusual health trends in the surrounding area. Modern reactor designs have significantly improved safety standards, and several states—including Illinois, Kentucky, Montana, West Virginia, and Wisconsin—have lifted their nuclear restrictions in recent years.
3. The moratorium has deprived the nation’s most populous state of its most reliable source of carbon-free electricity:  Nuclear plants operate 92.3% of the time compared to just 23.4% for solar and 34.3% for wind, making nuclear power essential for meeting the continuous electricity demands of data centers and AI computing systems, according to U.S. Energy Information Administration data analyzed in the report.
4. Cost of nuclear ban estimated at $12 billion over 20 years: California’s nuclear moratorium will cost the state $12 billion in capital investment between 2020 and 2040, according to analysis by the Breakthrough Institute cited in the report. This lost investment comes as the state faces the nation’s highest electricity rates in the continental U.S.
5. California pays other states for power while maintaining its moratorium: Despite prohibiting new nuclear plants, California imported 9,234 gigawatt-hours of nuclear power in 2024—nearly 15% of the state’s total electricity imports. The vast majority of this nuclear power (over 9,000 GWh) was imported into Southern California, where the state shuttered the San Onofre Nuclear Generating Station in 2013.
6. Gov. Gavin Newsom calls nuclear power “the only way” to meet state climate goals: The report cites Gov. Gavin Newsom in a 2025 podcast saying, “[Nuclear power] is absolutely critical moving forward if we’re going to help decarbonize and change. It’s the only way.”

“As the AI boom is driving a rapid expansion of data centers, California is losing its economic competitiveness and grid reliability by importing electricity generated in other states,” said Paige Lambermont, author of the report, which is part of the Independent Institute’s California Golden Fleece® Awards series. “Nuclear technology is carbon-free at the point of generation and has a decades-long safety record. California cannot afford to keep this power option off the table.”

California’s nuclear moratorium was enacted in 1976 and tied to a federal requirement for permanent nuclear waste disposal that was never issued, effectively blocking new nuclear development in the state for nearly 50 years.

The report arrives amid growing debate over whether California should reinstate nuclear power, as the state now has the highest electricity rates in the continental U.S. A bipartisan bill pending in the California Legislature would allow California to approve next-generation nuclear reactors that have been licensed by federal regulators since 2005. Lawmakers backing the legislation argue that nuclear power is necessary for California to meet its climate goal of 100% clean energy by 2045.

The California Golden Fleece® Awards are a series of in-depth reports from the Independent Institute that expose waste, fraud, and abuse in California at the state or local level. To receive this ignoble designation, a program, agency, policy, tax, or regulation must violate common-sense principles of responsible government, be considered wasteful by people of varying political philosophies, and must be well-documented.

For more information, contact Allen Young, [email protected] or Robert Ade, [email protected], or (510) 632-1366 ext. 114.

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The Independent Institute is a non-profit research and educational organization that promotes the power of independent thinking to boldly advance peaceful, prosperous, and free societies grounded in a commitment to human worth and dignity. For more information, visit Independent.org.