DCs go nuclear
Data centres represent an increasingly large proportion of our energy consumption, with crypto and AI driving a surge in requirements. DC operators have been exploring different sustainable energy sources to power their data centres locally and cleanly. Google started this week a new trend by ordering several Small Modular (nuclear) Reactors from Kairos.
Google, Microsoft and other hyperscalers have been deploying increasingly large data centre facilities to cope with additional demand for AI services (typically training their AI models). That is putting the electricity generation (power plants) and distribution (transmission lines) under stress. As the trend continues, data centre operators are turning to dedicated energy generation facilities to power their campuses.
Small Modular Reactors (SMR) are nuclear power plants that are smaller than the average nuclear plant (50-300MW vs 1-5GW). They can be partially prebuilt in a factory and deployed faster. The International Atomic Energy Agency also suggests that they have advantages where transmission lines (for electricity) are insufficient.
This trend complements other initiatives such as installing large arrays of solar panels locally or entering into long-term power purchase agreements with gas-powered plants, hydro-electricity plants (dams) and biofuel power plants. The move to nuclear by the private sector represents a step change in the electricity generation sector, where the size of investments required to build a full-size nuclear facility (several tens of billions of dollars) would require a national authority to take the lead. However, it is largely unknown whether the price per unit of electricity will be cheaper with SMR than with traditional nuclear plant.
Investing in SMR signals an interesting strategy for DC operators (of a certain size) to secure long-term access to high-density, low-carbon, localised energy sources. The case remains open if this is a long-term trend or an experiment.