Alibaba in Talks with Nuclear Power SOEs Over Small Modular Reactors for Data Centers

Alibaba has approached a Chinese state-owned nuclear power enterprise to explore the construction of small modular reactors (SMRs) to power its data centers, according to an industry source cited by China Business Journal. The discussions center on Alibaba's Renhe Data Center in Hangzhou, Zhejiang Province — the region's first cloud computing data center — which provides computing infrastructure for AI companies including BrainCo Technology and Lingban Technology. The facility faces significant and growing electricity demand driven by the rapid expansion of AI computing workloads. However, the negotiations face a fundamental hurdle regarding China's power grid architecture and pricing mechanisms, the source revealed. China's unified state grid system requires that any electricity generated — including from self-built power plants — must be fed through the public grid. If the SMR-generated electricity is transmitted via the public grid at approximately RMB 0.58 per kWh, the cost advantage of dedicated nuclear power for the enterprise becomes difficult to realize. The nuclear enterprise source noted that for such data center power supply projects to demonstrate economic viability, a model closer to "self-supply power plants" would be needed. Under current policy, however, even self-built power plants must connect to the public grid, making independent operation impossible — a barrier that has prevented the discussions from advancing to implementation. Despite these challenges, the nuclear enterprise continues to view computing centers as a key potential customer segment for SMR technology. China's domestically developed small modular reactor technology is progressing steadily, and the industry sees high-potential applications in coastal industrial parks, high-energy-consumption enterprises, and data centers. Alibaba's interest in nuclear energy is not new. In January 2026, CNNC (Xiangshan) Nuclear Energy Co., Ltd. was established with a registered capital of RMB 250 million. Among its shareholders is Shanghai Yiqi Network Technology Co., Ltd., a company 100% owned by Alibaba Cloud Computing Co., Ltd., indicating Alibaba's strategic positioning in the nuclear energy space. Small modular reactors offer advantages including high safety, smaller electrical capacity, simplified systems, lower initial construction costs, modular manufacturing, and easier transportation and installation. They can provide electricity, steam, and thermal energy for multiple applications. Analysts note that SMR technology still faces multiple hurdles for data center applications, including technology maturity, project approval processes, power supply models, pricing mechanisms, and nuclear safety regulatory frameworks before commercial deployment can materialize.