Data centers look to nuclear to meet rising power needs

Nuclear offers an uninterrupted, carbon-free power source for data centers that are rapidly expanding due to increased cloud computing and power-hungry artificial intelligence.

Servers for data storage at Advania's Thor Data Center in Hafnarfjordur, Iceland (Source: Reuters)

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Large data users, such as Google, Amazon, and Microsoft, have already started to look to nuclear power, especially small, advanced reactors, to feed their growing power needs.

Until recently, electricity demand was expected to grow slowly, if at all, with increased energy use efficiency and small-scale use of renewable sources, such as roof-top solar, seen taking the pressure off of power stations.

However, over the last 10 to 15 years, the push toward electrification across a wide range of economic activities has challenged that assumption, and none so more than data digitalization.

“We've all woken up to this idea that electricity demand and energy demand is going to ramp up significantly because of data center use, AI use, large language models and … image generation,” CEO of the American Nuclear Society (ANS) Craig Piercy said during a webinar on advanced reactors.

In March, Amazon Web Services (AWS) acquired Talen Energy’s up-to 960 MW Cumulus Data campus in Pennsylvania, powered by the Susquehanna nuclear power station, for $650 million plus proceeds from sales of energy to the grid.

AWS has minimum contractual power commitments that ramp up in 120 MW increments over several years, Talen said in a presentation.

Microsoft, meanwhile, whose founder Bill Gates also founded nuclear reactor developer TerraPower, recently employed a Director of Nuclear Technologies as part of its efforts to decarbonize.

To process and store digital data in data centers consumes huge amounts of electricity and, as an increasingly essential service for a functioning online economy, requires continuous, reliable power sources.

Some 460 TWh of electricity worldwide was consumed by data centers, cryptocurrencies, and artificial intelligence in 2022, almost 2% of total global electricity demand, according to the International Energy Agency (IEA).

The IEA’s base case for demand from digital services such is over 800 TWh by 2026 worldwide, almost the entire annual power consumption of Japan.

Cloud computing and data storage take up large amounts of space and power, but it has been the rise of artificial intelligence systems in the last few years that have really pushed the demand for stable baseloads.  

Estimated data center electricity consumption and its share in total electricity demand in selected regions

(Click to enlarge)

Source: International Energy Agency (IEA) Electricity 2024 - Analysis and forecast to 2026

Demand from hyperscalers

Around a third of the more than 8,000 data centers worldwide are in the United States and electricity demand for these centers is expected to grow by around 10% a year by 2030 from 2022 to 35 GW, according to global management consultancy Mckinsey.

Demand growth will be driven by hyperscalers, or large cloud service providers that can provide computing and storage at enterprise scale, such as Amazon, Google, Microsoft, IBM, and Alibaba.

Google, Microsoft, and Nucor said in March that they together planned to develop new business models and aggregate their demand for advanced clean electricity technologies, including advanced nuclear, next generation geothermal, clean hydrogen, long-duration energy storage and others.

Data centers run by these companies can use as much power as 80,000 households.

The world’s largest data center market is in Northern Virginia, and hyperscalers and others in the region needed 3.4 GW at the end of 2023, according to property consultants Newmark.

That demand is expected to quadruple over the next 15 years, Dominion Energy tells Reuters Events.

Many companies within clusters such as those in Northern Virginia are betting on solar and wind to decarbonize, but some are looking to nuclear, especially those that are far from production centers with existing transmission infrastructure.   

Oklo, a company working to design, build, own, and operate fast fission power plants, believes that only the flexibility and speed of deployment – once the next generation models are fully licensed and demonstrated – can properly respond to data center needs.

“Data centers are building now and they’re scaling up so tremendously that the pain is higher, and the need is greater, in the near term,” says Head of Business Development at Oklo, Brian Gitt.

OpenAI founder Sam Altman, Chair of the Oklo Board, identified the need for clean energy to power AI a long time ago and saw nuclear energy as one of the main vehicles to achieve it, Gitt says.

“AI is the gasoline on the fire in this, but the growth (in power demand) in the United States and in many parts of the West have been flat for a long time … and it's only recently that we're starting to see this escalation because of this convergence of trends that just completely changes the whole landscape,” says Gitt.

Stable and scalable

Global data center developer and operator CyrusOne, which has already spoken to several SMR developers, specializes in delivering digital infrastructure for nearly 800 customers through more than 50 mission-critical facilities worldwide.

The company is looking at many alternatives to decarbonize the generation of power for its data centers, but nuclear is the only form of baseload, carbon-free power that is capable of being weather de-coupled, it says.

“When compared to other forms of generation (the advantages) include grid stability, scalability, carbon reduction, recyclability of nuclear waste, hydrogen production, and decentralization of generation,” says James Roche, Senior Vice President of Engineering at CyrusOne.

Challenges include a decoupling of traditional nuclear facilities and SMRs in the eyes of the regulators, and cost, though this is expected to come down as developers move on from first-of-a-kind reactors.

However, the biggest problem with nuclear technology has been its image in the eyes of the public, Roche says.

“I’ve always said nuclear needs Geoge Clooney, Oprah, and the Pope to promote the benefits of SMRs,” he says.

By Paul Day