Small Nuclear Reactors Could Power Data Centers Sooner Than You Think

Small nuclear reactors have been eyed for years as a more sustainable way to power the booming supply of data centers. Now, just as the industry faces growing issues with access to its traditional power sources, a series of new regulatory approvals and projects could make that nuclear future a reality sooner than expected. 

In late January, for the first time, U.S. nuclear regulators fully approved a small modular reactor for commercial use. That came after an October regulatory decision that allowed SMRs to be built closer to densely populated areas than traditional nuclear plants. 

And last week, GE Hitachi and Canadian utility Ontario Power Generation announced plans for an SMR power plant that will be operational by 2028, the first commercial contract for a grid-scale SMR in North America. 

SMRs like NuScale’s now-approved Power Module are closer in size and scale to the reactors powering the Navy’s submarines and aircraft carriers than to the massive nuclear generating stations typically used by utilities. Their small size means they require a fraction of the footprint needed for older nuclear plants.

Proponents say SMR plants can be built more cheaply, more quickly and in more places than their traditional counterparts, with none of the risk of large-scale environmental catastrophe often associated with nuclear energy.  

Although the first commercial NuScale reactor is still six years away, data centers might well be the use case that brings modular nuclear power into mainstream use, experts say.

Data center developers and operators have been struggling to find development sites with access to the massive amounts of electricity these facilities need in the sector’s most important markets. At the same time, they are facing pressure to phase out energy generated by burning fossil fuels. It is easy to see why, to a growing cohort of industry leaders, SMRs are looking more and more like a potential solution to two of their biggest problems. 

“Data centers are a perfect application for this,” said Alan Howard, principal analyst at Omdia’s cloud and data center research practice and the co-author of a December study on SMRs' viability for data centers.

“All of a sudden, because NuScale has made progress and there’s a bunch of other projects in the works, people are starting to really talk about this," Howard added. "It’s a big deal, and it’s starting the process of developing the proof, the economic data and the use cases needed to bring it into the mainstream.”

Small reactors aren’t exactly a new technology. The first nuclear-powered warship launched in 1955, and Russia uses an SMR to provide power to rural communities in the Arctic Circle. But it is only within the past decade that companies like NuScale, Rolls Royce, Toshiba and Terrestrial Energy began making serious strides toward small reactors that can be produced cheaply enough and at enough scale to be commercially viable. 

The NuScale reactor approved by the Nuclear Regulatory Commission last month produces around 50 megawatts of power. That is less energy than is used by the largest data center campuses, although up to 12 of the modules can be grouped together as a single power source that could provide more than enough electricity for all the data centers in any market except Northern Virginia. Each module is 76 feet long by 15 feet wide, meaning that plants with multiple reactors can be housed in buildings smaller than the standard data center. 

The ability to generate lots of power on a small footprint is at the heart of SMRs' appeal for data centers. 

NuScale’s power plant design can produce 924 MW on just 0.05 square miles, the company says, compared with more than 1 square mile for even the smallest traditional nuclear plant or 94 square miles for a wind farm. And while federal regulations for traditional nuclear plants mandate a surrounding disaster management zone that prevents them from being constructed next to densely populated areas, an October regulatory decision determined that the emergency zone for SMRs is limited to the plant site itself, vastly increasing the number of places these facilities can be built. 

This kind of government support for modular nuclear technology in the U.S. and in places like Japan and the UK has been instrumental in moving SMRs closer to commercial viability.

The Department of Energy has pumped more than $600M into NuScale and other SMR projects since 2014 and will be the first customer for the energy produced by NuScale’s reactors. Scheduled to go online in 2029, the first commercial NuScale power plant will be operated by a Utah utility to provide energy for the Department of Energy’s Idaho National Laboratory. 

“SMRs are no longer an abstract concept,” Assistant Secretary for Nuclear Energy Kathryn Huff said in a written statement. “They are real, and they are ready for deployment.”

For data center developers and operators, SMRs offer a potential remedy to the power constraints that have limited development in key markets like Northern Virginia and Silicon Valley.

In places like Virginia’s Loudoun County, the problem hasn't been too little power being generated but rather insufficient transmission infrastructure bringing electricity from central power plants to sites with access to fiber and other features data center builders need. SMRs present the possibility of an alternative approach: Move the power generation to where the data centers are. 

Experts say this approach makes even more sense now that data centers are increasingly developed on large, multifacility campuses, and they are frequently clustered close to other data center operators or other power-intensive industries like chip fabrication plants or high-tech manufacturing. 

“Look at Sparks, Nevada, where you have the Tesla factory where they make their batteries, then almost within throwing distance you have a Google data center campus, an Apple data center campus and a Switch data center campus,” Omdia’s Howard said. “That would be the kind of development where this technology would be really appropriate.”

While some industry leaders have raised the idea of data center operators running reactors on their campuses or even using micro-reactors instead of backup generators, experts say the reality will almost certainly look more like NuScale’s project in Utah, with utilities partnering with data center providers or other end users to finance modular plants.

This is a model the data center industry has employed successfully in the past to drive the development of renewable energy projects, with hyperscalers like Meta agreeing to buy most of the energy from a planned wind farm or solar array in advance to secure financing. 

“You’re not going to have data center companies becoming power companies here,” said Compass Quantum’s Tony Grayson, a retired Navy submarine commander who has become one of the data center industry’s more vocal advocates for modular nuclear power. “The way it’s going to happen is data center companies signing long-term power purchase agreements, which are almost money in perpetuity, so they can show that to a lender who will give them the money to help them build a plant.”

So how soon could data centers drive the installation of SMRs?

NuScale’s reactor for the Idaho National Laboratory is scheduled to go online in 2029, but experts told Bisnow they expect the first commercial data center applications are a decade away. Still, 10 years is well within the planning horizon for hyperscalers in an industry where large facilities take over two years to build. 

But even the technology’s biggest boosters acknowledge that significant barriers to widespread adoption will persist, not the least of which is the risks — real or perceived — associated with nuclear energy.

While nuclear power is gaining growing acceptance as a “clean” energy source within the data center industry, its status remains something of a gray area when it comes to environmental, social and governance metrics and carbon reduction goals that are becoming a major consideration for data center tenants. On a more local level, new data center builds are already facing a growing wave of political opposition in Northern Virginia and other major markets, and that is without a nuclear reactor coming with them. 

Proponents of SMRs are insistent that fears about radiation or a potential catastrophe on the scale of Fukushima or Chernobyl are unfounded.

They point to the Navy’s 70-year track record of operating small nuclear reactors on ships without a single major incident and to the Navy now having nuclear reactors on 86 vessels that sail in and out of major cities every day without controversy. Additionally, they say SMRs are far more sophisticated, safer and easier to operate than traditional nuclear plants, and their small size means that a large-scale catastrophe simply isn't possible. 

Still, nuclear advocates like Grayson say developers and utilities hoping to power data centers with SMRs need to be ready with public outreach campaigns and concerted PR efforts if they expect to move projects forward. Successful models for moving this kind of nuclear project forward do exist: Grayson points to Bill Gates-funded TerraPower’s success in building community support for its reactor project in Wyoming.

Grayson added that some of the largest data center markets already use nuclear energy, so the addition of new reactors is unlikely to be controversial there. These markets include Northern Virginia and Phoenix, which he sees as likely early adopters for SMRs. 

“To me, it’s a no-brainer,” Grayson said. “Both have power operators that already operate nuclear, and both are at least somewhat power-constrained.”

Beyond public attitudes toward nuclear power, experts said it is the cost of building, installing and maintaining SMRs compared to other power sources that will ultimately determine data center demand for modular nuclear power. Indeed, reducing cost has been the primary challenge for companies like NuScale, Toshiba and Terrestrial Energy, who use modular construction techniques and use off-the-shelf components to keep the price of the technology competitive. 

NuScale says the overall cost to build, operate and maintain reactors will be in line with the current rates for other power sources, predicting an overall cost of $40 to $60 per MW produced. That figure is around $37 per MW for natural gas and onshore wind.  

But even if the economics of SMRs make sense for data centers, experts said the pace of adoption will likely be delayed by what is presently a lack of coordination between commercial reactor builders and the data center industry, which could potentially be one of the builders' best use cases. Omdia’s Howard said it has put the onus on the typically risk-averse data center industry to start the conversations that can pull this technology into regular use. 

“There’s the researchers and the private companies like NuScale and the government side of things, and they’ve all been working together for some time," Howard said. “What they haven’t been doing is engaging with their potential consumers and really getting a read on how this is going to play out commercially. Those two sides actually talking together is something that’s just developing now."