SMRs and data centers: The race for sustainable power solutions

Posted by | Rauf Mammadov

A new era in nuclear technology

A series of recent Small Modular Reactor (SMR) agreements by tech companies have sparked renewed excitement about the feasibility of SMRs. Amazon announced three agreements to advance the development and deployment of small modular reactors (SMRs) in the US. The company has partnered with Energy Northwest to deploy four X-energy reactors generating 320 MW by the early 2030s, made an equity investment in X-energy as part of a $500 million fundraising round, and signed an MOU with Dominion Energy to explore SMR development in Virginia¹. Similarly, Google has partnered with Kairos Power to integrate SMRs, aiming to bring the first reactor online by 2030 and expand capacity to 500 MW over the following years².

Rapid growth in data centers

Interest in Small Modular Reactors (SMRs) is growing in parallel with the rapid increase in data centers, driven by advancements in artificial intelligence and cloud computing. Traditional energy sources and existing grid infrastructures are becoming increasingly strained, prompting the tech companies to explore alternative, reliable, and sustainable power solutions. Goldman Sachs forecasts that data center power demand is expected to grow at a 15% CAGR from 2023 to 2030, expanding from about 3% of total US power demand currently to 8% by 2030³. To put it in perspective, a single ChatGPT request uses 10 times the energy of a standard (non-Al) Google search, according to the Electric Power Research Institute (EPRI).

Currently operating SMRs

Currently, only a few SMRs are operational worldwide. Russia’s Akademik Lomonosov, a floating nuclear power plant, runs two SMRs producing 35 MW each, powering remote regions in Russia. Argentina’s CAREM-25, a 25 MW reactor, is another example, aimed at providing stable power in isolated areas. These early deployments highlight SMRs’ potential to serve diverse needs but underscore the limited scale of current operations⁴.

Microsoft and Three Mile Island nuclear power plant agreement

Technology companies are also exploring options beyond SMRs. In the US, Constellation Energy has announced plans to restart Unit 1 of the Three Mile Island nuclear power plant in partnership with Microsoft. This 20-year power purchase agreement aims to supply approximately 835 MW of carbon-free electricity, expected to support Microsoft’s data centers across the PJM Interconnection region by 2028. The revival of Three Mile Island is a noteworthy step in integrating existing nuclear infrastructure with modern technology demands⁵.

Challenges

SMRs offer a promising solution to meet the escalating energy needs of data centers. Their modular design allows for scalable deployment, and they provide a consistent and carbon-free power supply, aligning with the sustainability goals of many tech companies.  SMRs offer a promising way to meet the growing energy needs of data centers, but they come with a range of challenges, especially in the US. These include tough regulatory requirements, high upfront costs, and public skepticism, along with issues like delays in connecting to the grid, permitting bottlenecks, and environmental lawsuits.

Amazon’s AWS deal with Talen Energy highlights some tough regulatory challenges. AWS bought Talen’s Cumulus data center campus for $650 million, aiming to power it through Pennsylvania’s Susquehanna nuclear plant. But in November 2024, the Federal Energy Regulatory Commission (FERC) blocked an updated agreement for connecting the power, raising concerns about keeping a steady power supply for this data center⁵.

China, on the other hand, is better positioned to implement the SMR project due to less stringent regulatory policies and state support. China has been active in SMR development, advancing multiple projects. The HTR-PM, a high-temperature gas-cooled reactor in Shidao Bay, achieved commercial operation in 2023, while the ACP100, a multi-purpose pressurized water reactor, is under construction in Hainan. Additionally, China’s experimental TMSR-LF1 reactor explores molten salt technology and thorium fuel, positioning China as a key player in a wide range of SMR applications.

Looking forward, SMRs are poised to play a crucial role in meeting the energy demands of data centers, but widespread success will depend on resolving regulatory, financial, and public perception challenges. If these barriers can be addressed, SMRs may soon transform how data centers—and other industries—achieve sustainable growth, marking a new era in nuclear technology.

References:

1. https://www.energy-northwest.com/whoweare/news-and-info/Pages/Amazon-and-Energy-Northwest-announce-plans-to-develop–advanced-nuclear-technology-in-Washington.aspx
2. https://www.datacenterdynamics.com/en/news/amazon-signs-deals-to-invest-in-nuclear-smrs-to-power-data-centers/
3. https://www.goldmansachs.com/insights/goldman-sachs-research/generational-growth-ai-data-centers-and-the-coming-us-power-demand-surge
4. https://www.mckinsey.com/industries/technology-media-and-telecommunications/our-insights/investing-in-the-rising-data-center-economy
5. https://www.investors.com/news/nuclear-energy-sp500-constellation-energy-earnings/?utm_source=chatgpt.com

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Tags: Energy, Innovation, Renewables, Sustainability