Data centers are increasingly turning to nuclear power to meet their growing energy consumption needs. According to Cushman & Wakefield, data centers globally consumed 7.4 gigawatts of power in 2023, representing a 55 percent increase from 2022. This significant rise highlights the escalating challenge that data centers impose on electrical grids. Projections by the International Energy Agency indicate that AI electricity consumption could exceed 1,000 terawatts globally by 2026, a level comparable to Japan’s current energy consumption. As data centers already put significant strain on electrical grids, potential localized shortages, high costs for grid upgrades, and challenges in managing peak demand fluctuations are growing concerns for power companies and grid operators.
The Rise of Nuclear Energy in Data Centers
High Capacity and Energy Efficiency
One emerging solution to meet these energy demands is nuclear power, favored for its high capacity and energy efficiency. Todd Smith, co-leader of Transwestern’s Technology Properties Group, referred to it as “the only green, at-scale solution for gigawatt-scale power.” He emphasized that AI-driven capital deployment is forcing the electrical grid to expand after a period of low growth, driving investment in nuclear power. In practical terms, nuclear power already plays a significant role in the energy mix for data centers, with various utilities in major markets receiving 20 to 35 percent of their power from nuclear sources.
In Northern Virginia, the largest data center hub in the U.S., Dominion Power derives nearly 34 percent of its fuel mix from nuclear energy. According to Pat Lynch, CBRE Data Center Solutions’ executive managing director, the reliability of nuclear power is crucial for data centers, which demand near-perfect uptime. This reliability makes nuclear power a viable and attractive option for data centers facing substantial and growing energy needs.
Industry Leaders Embrace Nuclear Power
The trend of data centers leaning towards nuclear energy is further highlighted by industry leaders like Microsoft. They recently signed a 20-year agreement with Constellation Energy to supply electricity from a reactor at the Three Mile Island nuclear power plant. This move underscores a broader industry shift towards nuclear power for its reliability and sustainability. Sean Farney, JLL’s vice president of America Data Center Strategy, noted that nuclear power not only offers reliability but also aligns well with environmental, social, and governance (ESG) goals. With predictably low kilowatt rates over a 40-year-plus life cycle, nuclear energy proves to be economically and environmentally advantageous.
The increasing reliance on nuclear power by data centers emphasizes the importance of consistent and efficient energy sources in an industry where power demands are surging. This shift is driven by the need to maintain robust and scalable operations, ensuring that data centers can meet growing demands without facing energy deficits or significant cost escalations.
Increasing Power Loads and Cooling Innovations
Surging Demand and Energy Consumption
A report from JLL showed a substantial increase in power loads for data centers, with new projects often requiring as much as 100 megawatts, and in some cases escalating to one gigawatt. This trend is compounded by other factors such as manufacturing reshoring and the adoption of electric vehicles, further straining energy consumption. Cooling represents a significant portion of this energy use. To address this, some operators are employing innovative cooling techniques: Japan uses snow, Finland utilizes seawater, while Iceland and Norway leverage geothermal methods.
Cooling innovations are essential for managing the internal temperatures of data centers, which otherwise face the risk of overheating and potential equipment failure. The need for these innovations becomes more pressing as energy consumption continues to rise, requiring data center operators to find creative and sustainable solutions to maintain optimal operating conditions.
Innovative Cooling Techniques
Despite the enthusiasm for nuclear energy deployment, there are significant barriers to entry. The primary challenge is the lengthy regulatory approval process required to establish new nuclear facilities, which can delay deployment times considerably. Although the U.S. Department of Energy finances 80 percent of U.S. nuclear facilities through loans, more concerted efforts from Wall Street and government entities are necessary to accelerate nuclear innovation. Additionally, public perception remains a challenge, especially in communities that recall historical nuclear incidents like Three Mile Island and Chernobyl.
Addressing these regulatory and public perception challenges is crucial for the continued adoption of nuclear energy in data centers. As innovative cooling techniques evolve and become more widely implemented, they represent a critical aspect of the broader strategy to manage the energy demands and operational needs of data centers efficiently.
Emerging Technologies and Small Modular Reactors (SMRs)
The Promise of SMRs
Emerging technologies such as Small Modular Reactors (SMRs) offer a promising solution to the energy demands of data centers. These reactors have quicker deployment times compared to traditional nuclear plants and are attracting investments from tech giants like Oracle, Google, and AWS. NuScale Power Corp. has even received NRC approval for its SMR design and is partnering globally to build SMR facilities. Google’s partnership with Kairos Power to build seven small nuclear reactors, expected to be operational by 2030, exemplifies this commitment to innovative nuclear solutions.
The adoption of SMRs represents a crucial step forward in addressing the rapid energy consumption growth of data centers. Their ability to be deployed more swiftly and efficiently compared to traditional nuclear plants makes them an attractive option for tech companies aiming to scale their operations sustainably.
Innovative Approaches to Nuclear Energy
Another innovative approach in the nuclear energy sector comes from companies like OKLO, which has developed “powerhouses” that recycle nuclear waste to generate energy. OKLO’s business model focuses on developing and operating energy plants and then selling electricity. The company has agreements to provide up to 1,250 megawatts to data center operators such as Equinix, further illustrating the potential of nuclear power in the data center industry.
These innovative approaches underscore the ongoing evolution of nuclear technology and highlight the significant strides being made to integrate nuclear power into data center operations. As these technologies mature and become more widely adopted, they offer the potential to meet the substantial and growing energy demands of data centers effectively.
Challenges and Future Prospects
Regulatory and Financial Hurdles
Despite the potential of nuclear energy, significant regulatory, financial, and public perception challenges remain. The major barrier is the lengthy regulatory approval process that delays the deployment of new nuclear facilities. While the U.S. Department of Energy finances a significant portion of nuclear facilities through loans, more coordinated efforts from Wall Street and the government are essential to advance nuclear innovation. Public perception poses another challenge, particularly in communities mindful of historical nuclear incidents like Three Mile Island and Chernobyl.
Overcoming these regulatory and financial hurdles is vital for the continued growth and adoption of nuclear energy in the data center industry. Addressing public concerns through education and transparent communication can also play a pivotal role in gaining broader acceptance of nuclear technologies.
Aligning Growth with Sustainability
Data centers are increasingly looking to nuclear power to address their rising energy consumption needs. According to Cushman & Wakefield, these centers globally consumed 7.4 gigawatts of power in 2023, marking a 55 percent increase from 2022. This considerable growth illustrates the escalating burden that data centers place on electrical grids. The International Energy Agency forecasts that AI-driven electricity consumption could surpass 1,000 terawatts globally by 2026, an amount akin to Japan’s present energy use. As data centers already exert substantial pressure on electrical grids, concerns over localized power shortages, high costs for necessary grid upgrades, and the complexities in managing peak demand fluctuations are intensifying for power companies and grid operators. Nuclear power is seen as a viable alternative due to its low carbon emissions and ability to provide a steady supply of energy, which can help alleviate some of these challenges. This shift to nuclear power might also help manage the economic and environmental impacts of the data center industry’s rapid expansion.
