Demand for Power Has Data Center Owners Going Nuclear

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Data center operators are turning to nuclear power as a stable, low-carbon energy source to meet growing demand, despite backlash over potential grid costs and public concerns about safety.

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Demand for Power Has Data Center Owners Going Nuclear

The rise of Artificial Intelligence (AI), the growth of data, and the popularity of cloud storage are all behind the demand for more data centers in the U.S. Data center owners and operators, under pressure to find power to fuel the surge in new data center facilities, are looking at nuclear power plants as alternatives to traditional power sources. 

In March, Amazon Web Services (AWS) acquired Talen Energy’s data center campus at a nuclear power station in Northeastern Pennsylvania for $650 million. AWS is planning to develop a 960 MW data center campus that will be powered by energy from the Susquehanna nuclear power station. That purchase set off a wave of companies exploring nuclear options in states including Maryland, New Jersey, Ohio, and Texas. Then, last week, the country’s largest operator of nuclear reactors announced a 20-year deal with Microsoft for electricity produced by a unit at Three Mile Island, the site of the infamous partial meltdown in 1979. The unit that is part of the deal was not involved in that incident but has not been in operation since 2019.

The surging data center industry is further straining an electric grid that has already been pressured by EV adoption, the resurgence of manufacturing, and extreme weather events. However, the growing interest in nuclear power has led to backlash from utility providers, who say that the agreements will lead to consumers paying higher prices and will threaten the reliability of the grid. “The emergence of data center colocation at existing generation facilities is a business arrangement that raises questions that should be explored regarding issues of basic fairness for all customers on the grid,” said Tony Clark, a former commissioner with the Federal Energy Regulatory Commission, during a House subcommittee meeting in June.

Nuclear energy has mostly been thought of as a vestige of the past, especially after several well-publicized nuclear meltdowns damaged the reputation of the energy production method and as renewable energy sources have become more popular with lawmakers and the public. While nuclear energy is typically not defined as a renewable energy source, it also does not release greenhouse gasses, so it is technically a low-carbon fuel. Aside from nuclear, data center operators are looking at sourcing hydroelectric power, solar, and wind from nearby power generators, especially in the Midwest, Texas, and the Southwest. 

Currently, nuclear energy produces around 9 percent of the world’s electricity, and that figure is on the rise according to the World Nuclear Association. One estimate from the International Energy Agency found that by 2026, global nuclear generation will increase by nearly 10 percent. Nuclear energy has a lot of benefits: data centers can nail down a stable, long-term power source while avoiding transmission and grid fees, and are using a carbon-free energy source that has a significantly smaller footprint and is not weather-dependent like wind and solar, according to JLL. However, there are still obstacles like regulatory challenges, getting new reactors licensed and improved, and maybe most importantly, overcoming public perceptions about the safety of nuclear energy.

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