Data Center Operators Are Considering The Nuclear Option

With stronger environmental regulations on the horizon, the data center industry is now eyeing nuclear energy as the pathway to sustainability. 

Why? Data centers operators are bracing for increased government scrutiny and tightening sustainability standards.

And with the largest providers already operating close to peak energy efficiency and with a rapid widespread build-out of renewable energy sources like wind and power prohibitively difficult in many markets — industry leaders are increasingly pushing nuclear energy as an acceptable carbon-free energy source.

“In 2022, we expect major data center operators, industry influencers and leaders to start supporting nuclear more actively and openly,” said Uptime Institute North American Vice President Matt Stansberry, speaking on a webinar outlining the industry group’s predictions for the coming year. 

“Data center operators are going to publicly endorse nuclear as a carbon-neutral power source.”

While sustainability initiatives have been a prominent talking point across the data center industry for some time, the specter of new environmental regulations and mandated emissions reporting has sparked renewed urgency among operators to secure non-carbon-emitting energy.

All eyes are on the European Union’s pending energy-efficiency directive known as Fit For 55, which aims to reduce greenhouse gas emissions by 55% by 2030 and could become law by the end of the year. Data centers receive particular attention in the legislation, which would require more granular reporting of environmental metrics and sustained improvement in reducing carbon emissions, even for data centers as small as a few hundred megawatts. 

Fit For 55 may be a European initiative, but its impact will be global, experts say. Data centers are operated by global companies, meaning prominent data center operators may still have to report data from facilities in North America and elsewhere. In the longer term, Stansberry says the EU legislation will standardize the metrics used to measure data center sustainability and force companies to commit the resources to report them, paving the way for similar regulatory regimes in the U.S. and elsewhere. 

“The European Union is going to be the flag-bearer on what’s likely going to be a wave of legislation,” he said.

According to Uptime Institute, the largest data center companies have little room to improve when it comes to efficiency — indeed, it’s at the heart of their business model.

So, with no room to cut back power usage, meeting the requirements of the anticipated regulations means purchasing power from cleaner sources. Nuclear energy may carry its own significant set of environmental concerns and significant stigma, but with better cost-efficiency, reliability and availability than truly renewable options in most markets, industry leaders are hoping regulators will consider it a legitimate alternative to fossil fuels, even as a stopgap measure. 

“People [are] interested in anything that gets them to net-zero carbon emissions,” said Scott Killian, Uptime Institute’s vice president for product management. “The consensus that we’ve heard from our members is that there probably isn't a way to get there, globally, without coming up without getting back to nuclear.”

Killian said the growing effort to destigmatize nuclear energy as an acceptable alternative to fossil fuels is already playing out in the public sphere, from data center executives publicly lauding West Virginia for reopening the state to nuclear power development to hyperscalers like AWS, Google and Microsoft mentioning nuclear energy on their websites as a low-carbon electricity option. 

Regulators, for their part, seem open to nuclear energy as part of a carbon reduction strategy. Significantly, the EU’s data center regulatory body — considered far stricter than any U.S. authority — has publicly declared nuclear power as an acceptable component of a zero-emissions energy mix.

“I can tell you that if the EU says it’s fine, I’m sure we will in North America,” Stansberry said.

The data center industry could be instrumental in driving new nuclear energy development. Currently, hyperscalers routinely underwrite renewable energy projects through power purchasing agreements, where the data center operator buys all or part of the future output of an energy project in advance — often at a discounted rate — and effectively finances the build-out of the solar or wind development.

Facebook recently used PPAs to supply green energy to its data centers in Utah and Iowa, while Microsoft and other hyperscalers have been instrumental in creating renewables infrastructure in Georgia. 

While the cost of developing a traditional nuclear power plant is on a different scale than wind or solar farms, experts said smaller, modular nuclear reactors could be financed through PPAs.

These smaller facilities — still an emerging technology — can put out as much as 10 to 100 megawatts and can be built in as little as three years. 

“Historically, most corporate PPAs green financing mechanisms have been limited only to renewable power that the excluded nuclear,” Killian said. “We expect that to change.”

Still, Killian acknowledged that there are significant barriers to small nuclear power plants being normalized as a source of energy for data centers. He pointed to safety concerns around nuclear material being used by a wide array of operators. He also cited concerns from industry professionals about the impact the presence of a small nuclear power plant would have on the fate of new data center developments.

“Not only do people not like my data center being in their neighborhood, but now they have a little nuclear reactor sitting with the data center as well,” he said.

“That’s a tough one to swallow.”