Aalo Atomics Nabs 1st U.S. Advanced Nuclear Fuel Deal, Advances XMR Reactor and AI Data Center Plans at INL

Aalo Atomics is building its “extra-modular” sodium-cooled reactor, the Aalo-1, designed to be manufactured like data center hardware and deployed in 50 MW blocks — called Aalo Pods — directly adjacent to digital infrastructure that requires on-site, behind-the-meter power.

In August 2025, the company closed a $100 million Series B led by Valor Equity Partners and shortly thereafter broke ground on Aalo-X, its first demonstration reactor, on Department of Energy land at the Idaho National Laboratory (INL). INL hosts multiple next-generation nuclear test programs, including the DOE’s Reactor Pilot Program, which Aalo was selected for; the program, created under President Trump’s Executive Order 14301, is aimed at accelerating advanced reactor testing.

Aalo-X is a single 10 MW demonstration reactor designed to validate the full manufacturing-to-operations lifecycle and pave the way for the planned 50 MW Aalo Pods intended to power AI data centers. The company is targeting initial criticality by July 4, 2026, with plans to operate an experimental co-located data center at the site, aiming for July 2027 for full operation.

The Reactor Pilot Program itself stems from a May 2025 executive order focused on reforming nuclear reactor testing at DOE, with the goal of at least three test reactors achieving criticality by July 4, 2026. The initiative fast-tracks small reactor testing compared with the traditional NRC licensing process; however, commercial nuclear power generation will still require NRC approval.

From Demonstration to Deployment: The Aalo Pod Strategy

The planned commercial product, the Aalo Pod, will consist of five factory-built Aalo-1 reactors sharing a single turbine to deliver 50 MWe per pod. Aalo describes the design as an XMR — “extra-modular reactor” — positioned between microreactors (<10 MW) and larger SMRs (100–300 MW). Its emphasis is on mass manufacturing, containerized logistics, and rapid on-site assembly. Early project documentation described a configuration of seven microreactors sharing common systems; the current plan will eventually deploy five XMR units per pod.

In keeping with its modular strategy, Aalo opened a 40,000 sq ft plant in Austin, Texas, in August 2024 to build the XMR modules and house company offices. The reactors are manufactured on-site and shipped as needed to deployment locations.

Funding, Safety, and INL Testbeds: Powering Aalo’s Nuclear Ambitions

Just days before the groundbreaking at INL, on August 19–20, 2025, Aalo announced a $100 million Series B led by Valor Equity Partners, with participation from climate, strategic, and venture investors including Hitachi Ventures, NRG Energy, Fine Structure Ventures, Tishman Speyer, Kindred Ventures, Vamos Ventures, and others.

Aalo said the funds would support the Aalo-X build, double headcount from ~60 to 120, and expand the Austin manufacturing footprint. Local reports indicate that this $100 million brings total disclosed investment to $136 million.

Aalo emphasizes that safety-related components of the microreactor are contained within a compact volume surrounding the reactor, allowing the building itself to resemble a simple metal-frame warehouse. Nearly all critical components are built in the factory and delivered to the site, reducing deployment timelines from years to months and cutting building material requirements by roughly 90% compared with a traditional nuclear plant.

The reactor employs sodium-cooled technology, pioneered by the Experimental Breeder Reactor II in the 1960s. Other advanced nuclear programs, most notably Oklo’s Powerhouse SMR designs, have explored similar approaches for small and modular reactors.

Advanced Reactor Programs at INL

The Idaho National Laboratory (INL) hosts the National Reactor Innovation Center (NRIC), a DOE program designed to bridge the gap between concept and commercial demonstration. NRIC provides test beds, licensing support, microgrids, and proving grounds, enabling projects to move from paper to hardware efficiently.

Key INL facilities include:

• Critical Infrastructure Test Range Complex (CITRC) — a 61-mile, 138-kV controllable test grid with multiple pads for connecting experimental generators, including transportable microreactors.
• Materials & Fuels Complex (MFC) / historic EBR-II area — the legacy fast-reactor campus, now repurposed for microreactor experiments and siting, including the iconic EBR-II containment “DOME.”

Major demonstration projects currently underway at INL include the following:

• MARVEL microreactor (DOE) — a first-of-its-kind nuclear microgrid sandbox.
• DOME test bed — allows testing of new projects without full NRC licensing.
• LOTUS test bed — the Laboratory for Operations and Testing in the United States; a secure facility for experimental microreactors up to ~500 kWth.
• DoD Project Pele — a Department of Defense project to build a transportable 1–5 MW reactor.
• Oklo “Aurora” powerhouse — a commercial-focused fast reactor.

Nuclear + Data Centers: A Convergence Trend

Aalo’s announcement adds to a growing list of nuclear startups that explicitly reference data centers as their first commercial market. Oklo has positioned its Aurora powerhouse as a plug-in solution for AI campuses, Kairos is developing fluoride salt-cooled reactors with potential colocation applications, and Last Energy is pitching its compact 20 MW units for industrial and IT workloads.

Hyperscalers are also signaling interest in firm, carbon-free nuclear. Google has backed advanced nuclear at TVA’s Clinch River, Microsoft signed a 20-year offtake deal with Helion for fusion, and Amazon has explored options for long-duration nuclear and hydrogen power. Each of these moves reflects the same reality: AI-scale power demand is colliding with clean energy commitments, and nuclear is increasingly viewed as a credible path forward.

Against this backdrop, Aalo’s XMR strategy — factory-built modules, simplified siting, and direct adjacency to compute campuses — positions it as part of a portfolio of experimental approaches. The next three years will be pivotal in showing whether these concepts can advance beyond demonstration to commercial deployment.

Regulatory Pathways and Challenges

The U.S. Department of Energy has accelerated advanced reactor testing at Idaho National Lab through its Reactor Pilot Program and NRIC initiatives. These test beds allow projects like Aalo-X, Oklo Aurora, and MARVEL to move quickly from design to hardware, bypassing some of the lengthy steps of traditional NRC licensing.

However, there remains a sharp distinction between DOE demonstration projects and true commercial operation. While the DOE can authorize on-site testing, selling power into the grid — or even into an adjacent commercial data center — still requires NRC approval. Industry observers note the tension between data center timetables, which measure deployments in months, and nuclear licensing cycles, which span years.

Aalo is betting that its modular design, coupled with DOE partnerships, can shrink the licensing gap. But for now, the central question remains: can nuclear speed up enough to match the urgency of AI power demand?

Economics of Modular Nuclear for AI Power

At the heart of Aalo’s pitch is the idea that modular manufacturing can bring nuclear closer to the cost, speed, and scalability that data center operators expect. Factory-built components, shipped in containerized form and assembled on-site, promise reduced construction risk, faster timelines, and a 90% reduction in building materials compared to traditional reactor containment.

The 50 MW Aalo Pod is designed as a “sweet spot” between microreactors (<10 MW) and larger SMRs (100–300 MW). This puts it in the same range as a medium-sized data center campus, potentially allowing for direct behind-the-meter deployment without complex grid negotiations.

The open question is price. Nuclear traditionally carries high upfront capital costs even when fuel costs are low. For hyperscalers, the benchmark is whether modular reactors can deliver electricity at or below the cost of firmed renewables or natural gas turbines. Until demonstration plants move into regular operation, economics will remain a critical uncertainty.

Data Center Implications of Behind-the-Meter Nuclear

If successful, Aalo’s model could reshape how data centers evaluate new sites. Historically, hyperscalers and colocation providers have clustered around strong transmission capacity, cheap land, and access to renewables. Aalo’s vision of colocating 50 MW pods next to compute campuses suggests a new blueprint: build where you can host a reactor.

Behind-the-meter nuclear would give operators control over carbon-free, always-available power while reducing dependence on congested regional grids. It would also insulate campuses from rising interconnection delays, which can stretch to five years or more in some U.S. regions.

If Aalo’s July 2027 target for its experimental data center proves viable, it could serve as a template for an “AI campus + reactor pod” model. Such designs could become attractive for remote or power-constrained geographies — provided regulators, communities, and investors are willing to buy in.

Industry Voices: Support and Skepticism

Reactions to nuclear colocation range from enthusiastic to cautious. Data center real estate experts at firms like JLL and CBRE note the appeal of unlocking stranded land with no grid connection but warn of the long timelines and public scrutiny that accompany any nuclear project.

Nuclear engineers highlight sodium-cooled fast reactors’ proven history in experimental settings but caution that scaling them for commercial use is uncharted territory. Advocates point to Aalo’s simplified design and modular construction as ways to overcome historical barriers, while skeptics stress that fuel supply, waste management, and emergency planning remain unresolved.

For policymakers and communities, nuclear power still carries cultural and political baggage. While hyperscalers are often eager to sign clean energy deals, convincing local communities to host reactors next to AI campuses may be the harder test.

The Big Picture: Toward 2030 AI Infrastructure

The timeline is tight. Aalo’s target of July 2026 for reactor criticality and July 2027 for a colocated data center aligns with a wave of other demonstrations — Oklo’s Aurora, the DoD’s Project Pele, and DOE’s MARVEL reactor among them. By 2028–2030, many forecasts suggest AI demand will exceed the availability of carbon-free power in multiple U.S. regions.

This creates a convergence: advanced nuclear startups will be moving from demonstration to commercialization at the same moment hyperscalers are scrambling for new sources of firm, clean electricity. Whether Aalo’s XMR pods and similar projects can scale fast enough will determine if nuclear becomes a mainstream option for AI campuses or remains a boutique solution.

And the race may already be accelerating. Today, Aalo disclosed that it has secured the first commercial contract for enriched uranium fuel delivery by a U.S. advanced nuclear company — a milestone that positions its Idaho demonstration project as the leading candidate to achieve near-term operation.

As of Publication: Aalo Secures First U.S. Advanced Nuclear Fuel Contract

On the very day this article went live, Aalo Atomics revealed a major milestone: it has become the first U.S. advanced nuclear reactor company to sign a commercial contract for enriched uranium fuel delivery. The deal, finalized in July 2025 with Urenco, positions Aalo-X to be fueled and operational on schedule for its targeted criticality in July 2026.

Urenco will provide 5% low enriched uranium (LEU), to be fabricated into uranium dioxide (UO₂) fuel for Aalo’s sodium-cooled reactor at Idaho National Lab. The first deliveries are expected in late 2025 or early 2026, giving Aalo confidence that its demonstration unit will become the first advanced U.S. reactor in decades capable of producing power.

Yasir Arafat, Aalo Atomics’ CTO, called the milestone a “catalyst” for the company’s mission:

“The enriched uranium being supplied to Aalo by Urenco is an exciting catalyst on our path to criticality in 2026. Not only is the uranium available immediately, but it is also completely scalable, providing us with the ability to deploy Aalo Pods for data centers again and again at gigawatt scale, keeping pace with demand.”

Urenco executives echoed the sentiment, citing Aalo’s unique modular approach and speed to market as reasons for their long-term partnership.

This breakthrough comes as Aalo completes its Conceptual Design Review with more than 40 experts, secures official site allocation from DOE’s Idaho Operations Office, and receives a favorable Environmental Assessment Determination, streamlining the project’s environmental review.

Taken together, these steps mark Aalo’s transition from ambitious startup to frontrunner in a sector that is suddenly moving faster than many industry veterans expected. For the data center industry, the implications are clear: advanced nuclear isn’t just experimental anymore — it’s being fueled for deployment.

At Data Center Frontier, we talk the industry talk and walk the industry walk. In that spirit, DCF Staff members may occasionally use AI tools to assist with content. Elements of this article were created with help from OpenAI's GPT5.

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