What does it take to be a serious player in the hyperscale data centre business? Pentagon-grade security, and miles of racks bristling with GPUs are no longer enough. If you want to show you’re in it for the long haul, the latest status symbol is a flow of nuclear energy. Ideally from your own reactors.
In October alone, AWS announced an agreement with Energy Northwest to develop a quartet of Small Modular Reactors (SMRs) that will eventually deliver 960MW of power. It is also investing in SMR maker X-energy and concluded a deal to locate a data centre next to a traditional nuclear facility in Pennsylvania.
This came as Google inked a deal with Kairos Power covering a “fleet of advanced nuclear power projects”. And Microsoft has struck a deal to restart a mothballed nuclear reactor at the Three Mile Island nuclear plant in Pennsylvania, site of a notorious partial meltdown at another reactor in the 1970s.
The Three Mile Island disaster put the seal on nuclear energy’s problematic reputation. And this was amplified by the Chernobyl disaster in the 1980s. A decade ago, there was a drive to shutdown aging nuclear facilities – Germany has since eradicated its nuclear sector completely.
But the energy landscape has changed, in part, due to the focus on reducing carbon emissions, and a drive towards electrification, not least in transport. The geopolitical environment has also changed dramatically, with energy sovereignty a priority for many governments.
So, nuclear has been reborn as an, if not utterly green, certainly carbon free energy source. Which is precisely what data centre operators desperately need – and by implication, what their enterprise customers and consumers or enterprises, are demanding.
The International Energy Agency expects electricity consumption by data centres to double by 2026, fuelled by GenAI, as well as cryptocurrency. While data centres sucked in an estimated 460TWh worldwide in 2022, this is likely to stand at 1000TWh in 2026, roughly the equivalent of Japan’s entire electricity consumption.
Data centre industry veteran, and president of the European Data Centre Association, Lex Coors says the industry is already facing a shortage of capacity, so “It’s about what are the options. What energy sources can I find? How do they fit in zero carbon emissions?”
The smaller nuclear option
Nuclear raises particular concerns, such as radiation and disposing of waste. But, he added, other options also present problems. “Even if I would put in fields and fields of solar, they also have an issue. There’s nothing growing underneath. There’s always a counter side to the benefit.”
But it is also clear that traditional nuclear plants aren’t going to fill the gap anytime soon. Even if a traditional gigawatt nuclear plant could be fast-tracked, the grid networks in many major economies are creaking, making it hard to get the energy to where it is actually needed.
Hence the appeal of small modular reactors, explains Philip Vaughan, a Policy Fellow of the Nuclear Institute. These produce from 20MW to 470MW, enough to directly power a hyperscale data centre, while sidestepping the need to draw from the grid. They are largely built in factories, Vaughan explains. This should ensure more consistency around quality and delivery.
Vaughan says big tech is recognising how this can meet their needs of providing permanent power, reliably, with a much smaller footprint. And they don’t have to worry about that power being diverted somewhere else. “Fundamentally they can own that power, so they have complete control over it.”
Likewise, SMRs give the ability to produce not just electricity but “high temperature energy”, which can be used in other industrial processes, or for district heating. “There’s a versatility that is new to the nuclear industry.”
Not everyone is convinced. Dr Doug Parr, Policy Director for Greenpeace UK says, “The examples of SMR development we have seen so far have had the familiar delays and cost overruns common to new reactor designs, and the only solution they offer to the drawbacks of nuclear power is to distribute them across a wider area.”
Moreover, as Coors points out, SMR designs also need approvals. There are still local planning issues to surmount. The effort to rebrand nuclear energy as green might crumble in the face of local opposition, already unhappy about the prospect of a data centre being thrown up on their doorstep.
But there are also broader challenges, Coors says. “Think about security, transport of fuels, storage of the fuels? How many rings of security do I need to put around my data centre?”
At Greenpeace, Parr asks, “Will Silicon Valley be taking responsibility for their own nuclear waste disposal and site decontamination as well as power generation?”
That’s assuming operators can secure fuels in the first place. There’s a drive to boost uranium mining in the US, but as energy systems firm Schneider Electric’s chief advocate for data centres, Steve Carlini says, this has resulted in local opposition.
And there’s a skills issue to tackle. As Vaughan says, the nuclear industry is greying. SMRs, by their nature, will not require so many highly skilled nuclear specialists on site, he suggests.
However, Coors adds, the industry still needs to train people up and convince them that it will stick with nuclear as a power option into the future. “We need to make sure we don’t send people to university to get a degree on nuclear, if this is just a trend of 10 to 15 years.”
Power up
And timelines are a problem. AWS’s announcement says delivery of the Energy Northwest SMRs will “help meet the forecast energy needs of the Pacific Northwest beginning in the early 2030s.” It will be 2035 before Google’s first tranche of SMRs are fully online.
This means that big tech will be looking to other options to fill a widening energy gap in the meantime. Carlini says this could see data centre operators turning to the sort of gas turbines X reportedly installed to power its xAI project. Being gas-based, they are hardly green.
At the same time, data centre operators are putting in more and more energy storage systems in their facilities, raising the potential of “microgrids”, he says. “Once you get two hours of energy storage, then you’re going to be able to collaborate with utilities.” This could mean storing excess energy from renewables in data centres, and even pumping it back into the network when the utility needs it.
Either way the data centre sector is facing an energy crunch right now and it’s only going to get worse. Carlini says the big operators are stepping up and investing their own money in solving the energy gap. And right now nuclear does seem to be the long-term destination.
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