The nuclear option: Why the data centers of the future could run on the power source of the past

Enterprise tech companies have been at the vanguard of investment in renewable and sustainable energy over the last two decades, seeking new, clean power sources for their rapidly expanding data-center campuses that allowed a generation keenly aware of the threat of climate change to sleep at night. But the AI boom is pushing the limits of those sources, forcing utilities around the world to push back on new data-center construction plans and keep their coal-fired plants running.

A relatively small but fast-growing number of people believe the solution is nuclear power, which just a few years ago seemed like a dangerous relic of the 1970s and 1980s. But nuclear reactors offer almost everything data centers need in a power source; they provide a constant, efficient, and reliable stream of electricity that could supplement other renewable sources like solar and wind.

"This is stuff we figured out in the 1940s and 1950s, before the personal computer was invented," said Michael Crabb, senior vice president of commercial at Last Energy, a company building small modular reactors, or SMRs. "We've gotten a lot better at it."

But it is almost impossible to get a nuclear plant built in 21st-century America. Georgia Power opened the Vogtle 4 unit just last month after opening the Vogtle 3 unit in 2023, and both of those projects took more than 14 years to get up and running. Before that, the only new nuclear power plant built in the U.S. since 1996 was the Watts Bar Unit 2 in Tennessee, which came online in 2016 after construction began back in 1973.

SMR companies like Last Energy are betting that smaller reactors can fill the energy gap much more quickly than waiting for large-scale plants to be built to service the power grid. Other startups, like Helion Energy and Commonwealth Fusion Systems, want to aim higher by proving that nuclear fusion can be a practical alternative to meet the energy needs of the next computing boom.

And last week the White House weighed in on behalf of the nuclear revival, which if the Biden Administration manages to secure a second term could lead to profound regulatory change.

“Nuclear and renewables are complementary and nuclear is the only proven clean and firm energy technology,” said Rian Bahran, assistant director of White House Office of Science and Technology Policy, according to Data Center Knowledge.

Up and atom

A new generation of data centers designed for AI workloads is already putting a strain on the power grid, and in recent months AWS, Microsoft, Google, Meta, and other hyperscalers have announced plans to sink well north of $100 billion into data-center expansion just this year. At the same time, real-estate companies like Blackstone see a land grab underway and have aggressive plans to build data centers for companies that want to manage their own AI servers.

Energy production from sources like solar and wind power has skyrocketed in recent years, but if the AI boom has staying power it won't be enough. Over the last several years support for increasing U.S. nuclear power supplies has boomed within tech circles, especially after Germany was forced to spend billions on new natural-gas power plants this year thanks to its decision to shut down its once-vibrant nuclear power industry following the Fukushima disaster in 2011.

In 2022, Microsoft signed a deal with Terra Praxis to "decarbonize coal facilities with nuclear power, helping transition one of the world’s largest sources of carbon to zero emissions" using Microsoft software and services. The following year it posted job ads for nuclear experts who could conduct "the technical assessment for the integration of SMR and microreactors to power the data centers that the Microsoft Cloud and AI reside on," according to DCD.

But heads turned just a few months ago in March when AWS purchased a data-center campus in Pennsylvania powered by a nearby nuclear plant run by Talen Energy. Two weeks later, Microsoft and Google teamed up to announce plans to help "develop new business models and aggregate their demand for advanced clean electricity technologies," including "advanced nuclear," which includes SMRs.

SMRs like Last Energy actually borrowed a lot of design principles from the data-center buildout of the last 15 years, Crabb said. Last Energy's 20-megawatt nuclear prototypes are 12 feet tall, 12 feet wide, and 48 feet long, and they are made up of modules that can be chained together to add more power as required by modern cloud data centers, which typically consume between 20 to 100 megawatts of power depending on their size.

Last Energy's pitch to data-center companies is simple: we run the nuclear stuff, you buy the power, and we can get up and running in a fraction of the time it takes to add large-scale nuclear power plants to the U.S. electrical grid.

"If you take 15 years to build a gigawatt scale facility, there's no world where you can establish a commercial relationship with a data center that takes 18 months to build their facility," Crabb said.

Come together

However, SMRs are in the somewhat-disappointing section of the hype cycle, with only two in production around the world as of March. And like the large-scale reactors of the past, they generate a hazardous waste product that must be dealt with very carefully and protected for a longer scale of time than the server that is hosting this article will likely be online.

That lack of progress has spurred interest in the holy grail of energy production: nuclear fusion, which promises a safe, reliable source of energy with a waste product that decays much faster than waste from nuclear fission.

"It's clean, it's firm, it's safe, it's scalable, it's secure," said Rick Needham, chief commercial officer at CFS. "It finally removes you from the geopolitical supply chain completely."

However, it is very important to point out at the onset of any discussion regarding nuclear fusion that the technology has not been proven to actually work at any kind of commercially relevant scale, let alone the scale that nuclear fission has provided for decades. In late 2022 researchers demonstrated that they could generate more energy from fusion than used to produce the reaction, which was an important milestone that nonetheless leaves the industry a decade or more from actual commercial relevance.

Microsoft signed a power agreement with Helion Energy in 2023 that could deliver as much as 50 megawatts of power by 2028. assuming it delivers on its plans. CFS, which has raised $1.8 billion in funding from the likes of Tiger Global, Bill Gates and Google, hopes to have a 400-megawatt plant up and running by the early 2030s, Needham said.

The worst thing that happens at a fusion plant is it just turns off.

But fusion backers have a big advantage over fission fans; the U.S. has agreed to regulate fusion development "more like a particle accelerator, or a medical facility that does radiotherapy," Needham said. That means if the technology becomes commercially viable, fusion plants will be much easier to construct than fission plants — even SMRs — under the current regulatory rules.

"The worst thing that happens at a fusion plant is it just turns off," Needham said. "It is not a chain reaction; there's no such thing as a meltdown at a fusion plant."

Promises kept?

In order to build out the next generation of data centers, the hyperscalers are going to need to either find alternative sources of energy or backtrack on the climate pledges they've all made; including Amazon, which literally sponsors a hockey rink called Climate Pledge Arena. Microsoft is already running into trouble living up to its promise to be carbon-neutral by 2030, acknowledging two weeks ago that its energy footprint has grown 30% in just the last four years.

When building new data centers, Microsoft typically signs long-term power-purchasing agreements with utilities for up to ten years of supplies, said Alistair Speirs, director of Azure global infrastructure. The company has no immediate plans to specifically increase its use of nuclear power plants in the near future, he said, but it will take any form of clean energy it can get as it expands.

"Our requirement is zero carbon," Speirs said. "An electron doesn't have a barcode, you don't know where it came from." However, Microsoft is primarily interested in sourcing energy from the broader electrical grid, he said, and likely won't be running its own power plants any time soon.

This story was updated to clarify the size of Last Energy's nuclear prototypes, and to remove misleading pricing information provided by a Last Energy executive.