AI Power Demand and the Iran War Drive Nuclear Back to Centre Stage
Nuclear power is back on the agenda for utilities and governments as AI infrastructure buildout, an active war in Iran, and climate policy mandates collide into what analysts characterised as an energy "polycrisis," OilPrice.com reported on Thursday (2026-06-26).6
The AI energy problem is real and specific. Nvidia's semiconductor revenues are forecast at roughly $46 billion for the three months to July 2026, and the compute underlying those sales runs continuously — not seasonally, not intermittently. The Economist's analysis found that power supply constraints, rather than chip or software limits, represent the binding ceiling on AI expansion, a dynamic that distinguishes the current buildout from previous technology booms.3
Equipment suppliers are responding to the demand signal. Babcock & Wilcox, which makes industrial power generation equipment and has repositioned for AI data centre baseload work, secured a $2.4 billion design-build contract with Base Electron for 1.2 gigawatts of natural gas-fired capacity as of May 2026, driving its backlog up 470% to $2.8 billion. Management guided 2026 core adjusted EBITDA to between $70 million and $85 million, approximately 80% year-over-year growth. Base Electron is evaluating a further 1.2 GW option; the global pipeline exceeds $12 billion.2
Natural gas is a bridge. The AI baseload thesis — round-the-clock demand, indifferent to weather, flexible on location — structurally favours nuclear over wind and solar. US-China competition in advanced semiconductor production is compounding the urgency on both sides: both economies are committing to data centre expansion on timescales that require baseload energy decisions now.4
The Iran conflict adds an acute overlay to the longer-term supply story. Washington issued a two-month waiver allowing Iranian crude sales in US dollars until August 21, with Tehran pitching barrels to buyers in India, South Korea, and Japan.5 ICE Brent crude front-month settled at $73.08 as of Friday's close (2026-06-27), with NYMEX WTI at $69.23. The waiver window matters most for Asian buyers weighing spot crude against a JKM Asian LNG price of $15.52.
Energy storage is also seeing AI-linked capital flows. Fluence Energy reported record backlogs through May 2026 and new master supply agreements with two major hyperscalers, pushing the company's 2026 revenue target to $3.2 billion to $3.6 billion with 85% of the midpoint already contracted. Analysts expect a strong third quarter as approximately $80 million in deferred Q2 shipments are recognised when delivery schedules normalise.1
The balance sheet risks are real. Babcock & Wilcox carries stockholders' equity of negative $131.5 million and faces a 6.50% note refinancing due in 2026. Fluence has yet to turn a profit.2 A credit tightening or project delay could expose the gap between current backlog enthusiasm and execution capacity.
ICE Endex TTF front-month closed at €41.08 as of Friday (2026-06-27), with NBP UK gas at €43.66. At those levels the coal-to-gas switching economics remain tight in Europe, sustaining coal burn near term and reinforcing the nuclear-versus-gas debate for baseload investment.
What determines the pace is whether capital commits to nuclear builds before gas-fired infrastructure calcifies for the long term. AI's demand trajectory will not wait for decade-long reactor build times — but locking in gas-fired baseload through the 2030s carries its own forward carbon cost that neither governments nor corporate buyers have fully priced.