Oct 29 (Reuters) - U.S. nuclear power generation is set

to rise, analysts at Wood Mackenzie said, as surging demand

driven by data centers strains grids across the country and a

wave of tech companies sign deals to source power from the

zero-carbon resource.

A flurry of announcements in nuclear energy investments -

most recently an $80 billion U.S. government partnership with

the owners of Westinghouse Electric - underscore the rising

interest in the sector. The power industry is grappling with

increasing electricity demand from energy-intensive data

centers, rising temperatures and electrification.

"Technology companies are now becoming energy providers by

necessity to meet this growing demand, especially in the U.S.

where nuclear power is emerging as a preferred solution," said

Lindsey Entwistle, principal research analyst at Wood Mackenzie.

NextEra Energy ( NEE/PU ) reached a partnership deal this week with

Google to restart an Iowa nuclear plant, while other tech giants

like Microsoft ( MSFT ) have also signed deals for next-generation

nuclear technologies.

But many of these will take time to complete construction,

Entwistle said. Wood Mackenzie expects U.S. nuclear generation

will remain steady until 2035, and then increase 27% through

2060.

Globally, data center power demand is expected to hit 700

TWh in 2025, rising to 3,500 TWh by 2050 - equal to the current

combined electricity demand from India and the Middle East -

according to the firm's latest energy transition outlook. Global

nuclear capacity is expected to grow from 400 GW currently to

between 800 GW and 1,600 GW by 2060.

Small modular reactors in particular are viewed as cheaper,

quicker to build, and can be co-located with data centers,

removing the need for additional power infrastructure, said

James West, managing director at Melius Research.

However, the nuclear industry will face multiple challenges

to stay competitive, including project and permitting delays,

cost overruns and labor shortage.

For newer technologies like small modular reactors, ensuring

policy support and funding for first-of-a-kind projects will

also be a challenge, said Entwistle.