By 2022, datacentres were set to consume about 2% of global energy. Fast forward to 2026, and that’s expected to rise to 4%, reaching around 100 terawatt hours a year—roughly the same energy usage as Japan.
Lloyd Jones from Gartner highlights that energy utility clients are increasingly refusing to supply datacentres because they can’t guarantee a consistent power supply year-round. But nuclear power is gaining traction as a viable alternative to fossil fuels for datacentres.
Recently, Alphabet inked a deal with Kairos Power to explore small modular nuclear reactors (SMRs) as a complementary power source alongside renewables. Michael Terrell from Google noted that this partnership can help meet net-zero emission goals.
Microsoft also got in on the action, announcing a 20-year power purchase agreement with Constellation Energy’s Three Mile Island nuclear plant. Meanwhile, Amazon acquired the Cumulus Data Assets datacentre site near the Susquehanna Steam Electric Station.
A Moody’s report outlines the benefits of nuclear power, pointing out that it produces electricity without greenhouse gas emissions and provides a stable, around-the-clock energy source—unlike solar or wind. But there’s a catch. The report raises concerns about the risks associated with SMRs, which are still considered an emerging technology. Past nuclear projects in the U.S. have been plagued by delays, cost overruns, and sometimes even bankruptcies. For example, a recent partnership between Utah Associated Municipal Power Systems and NuScale Power Corporation fell apart due to escalating development costs.
As these tech giants pursue nuclear partnerships, Jones cautions to take their plans with a grain of salt. No SMR has successfully completed licensing and construction for commercial use yet. Moody’s emphasizes that the technology is still under development and will likely face rigorous regulation.
Jones also warns that without operationally cost-effective SMRs, hyperscalers might scale back their net-zero commitments. He suggests they could resort to installing gas generators on-site since energy utilities are limiting datacentre power applications. He further points out that as demand for AI and machine learning grows, the emissions tied to powering these operations are also increasing.
Building microgrids for local energy generation at datacentre sites will encounter significant regulatory hurdles. The U.S. Federal Energy Regulatory Commission recently denied a request from PJM Interconnection to expand the interconnection service capacity between Talen and Amazon from 300MW to 480MW.
Moody’s also highlighted that such regulatory decisions could hinder the direct purchase of electricity from on-site plants, which would facilitate quicker access to energy.
Before microgrids and SMRs can truly serve datacentres, regulatory obstacles will need addressing. Yet, Moody’s suggests that utility companies could collaborate with the tech sector to mitigate risks associated with SMR development, potentially making these technologies commercially viable. The resources and scale of giants like Amazon, Google, Microsoft, and Meta might make them well-equipped to handle the financial challenges that come with SMR projects.