While 2025 was about the chips, 2026 is about the plug

⚠️ Not Financial Advice
These are the personal views and research of the Nomad Investor. Nothing published here constitutes financial advice. Always consult a licensed financial adviser before making investment decisions.

In 2026, the race to power artificial intelligence (AI) systems and data centres is shifting from processing chips to the availability of electricity itself. With global data centre power demand projected to rise by a staggering 17% this year, energy constraints are becoming a choke point for the tech sector’s growth. For Australian investors, this shift presents a critical question: how do we navigate the opportunities and risks in the emerging “Powering AI” ecosystem?

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The answer may lie in a nuclear renaissance. As renewable energy sources like solar and wind strain under intermittency issues, small modular reactors (SMRs) and grid-scale battery storage are gaining traction. These technologies promise not only carbon-neutral power but also the reliability needed to meet the energy-intensive demands of AI. With power prices already a political flashpoint in Australia and beyond, understanding the forces reshaping energy markets is essential for positioning portfolios in 2026 and beyond.

What’s Happening

Energy availability has emerged as the primary bottleneck for global tech expansion. Over the past five years, AI workloads have grown exponentially, driving demand for hyper-scale data centres. These facilities consume enormous amounts of power, often equivalent to small cities. According to the International Energy Agency (IEA), data centres and data transmission networks now account for nearly 3% of global electricity consumption, up from 1% in 2010.

In response, the private sector is turning to innovative solutions like small modular reactors (SMRs), which are compact, factory-assembled nuclear reactors designed for decentralised energy generation. The US Department of Energy predicts that SMRs will begin commercial deployment by 2030, with some prototypes already operational. Meanwhile, investments in grid-scale battery storage are set to reach USD 20 billion globally in 2026, according to BloombergNEF.

Australia is uniquely positioned in this energy transformation. The country’s natural resources make it a key player in the production of critical minerals like lithium and uranium, both of which are essential for batteries and nuclear energy. However, domestic power prices—already among the highest in the developed world—pose a challenge. As tech giants like Google, Amazon, and Meta seek carbon-neutral energy solutions, companies that can deliver reliable, off-grid power are emerging as crucial partners.

The Data Behind the Story

The numbers tell a compelling story about the scale and urgency of this transition:

Metric	2023	2026 (Projected)
Global data centre energy use (TWh)	240	280
Investment in grid-scale storage (USD)	12 billion	20 billion
Share of SMRs in nuclear projects	5%	25%

Stat Highlight: Australian uranium exports are projected to rise 15% in 2026, driven by global demand for nuclear fuel.

What This Means for Investors

For investors, the “Powering AI” trend opens opportunities across several asset classes:

Energy Infrastructure: Companies specialising in SMRs, battery storage, and microgrids are poised for significant growth. ASX-listed firms like Origin Energy and AGL Energy are already exploring grid-scale storage projects.
Critical Minerals: Lithium and uranium producers stand to benefit from the rising demand for batteries and nuclear fuel. Keep an eye on companies like Pilbara Minerals and Paladin Energy.
Real Estate: Data centre REITs, particularly those investing in facilities with dedicated energy solutions, could see increased demand from tech companies.
Green Bonds: As governments and corporations fund renewable and nuclear projects, green bonds offer a route to participate in this transition.

Opportunity Spotlight: Small modular reactor developers like NuScale Power and Terrestrial Energy are attracting record private funding, signalling strong growth potential.

Key Risks to Watch

While the opportunities are compelling, there are risks investors must consider:

Regulatory Hurdles: Nuclear projects face lengthy approval processes and public opposition, which could delay deployments.
Technological Uncertainty: New energy technologies like SMRs and advanced batteries are unproven at scale, posing execution risks.
Geopolitical Tensions: Australia’s uranium exports may face barriers due to global instability or protectionist policies.
Energy Price Volatility: While high energy prices benefit producers, they could harm broader economic growth, affecting equity markets.

Warning: A failed rollout of SMRs could lead to stranded assets and financial losses for early investors. Proceed cautiously in speculative plays.

Nomad Investor Takeaways

Global data centre power demand is driving a critical shift in energy infrastructure investment.
Small modular reactors (SMRs) and grid-scale battery storage are key technologies to watch.
Australian investors can leverage the country’s position in uranium and lithium production.
Energy infrastructure firms and green bonds are attractive options for diversifying portfolios.
Be aware of regulatory and technological risks when investing in emerging energy solutions.
Focus on companies with clear paths to profitability and proven execution capabilities.
Keep an eye on geopolitical developments that could impact critical mineral exports.