Big Tech Takes BYOB Approach To Power Crisis

For the first time, tech firms and utilities are pitching concrete plans for data centers powered by small nuclear reactors, attempting to bring new power to sites faster as the market faces a shortage. But the technology’s commercial viability remains uncertain. 

Electric utility Appalachian Power announced plans last week to develop small modular nuclear reactors on a site in Campbell County, Virginia, around 100 miles southwest of Richmond.

The project is the latest in a wave of SMR development proposed in Virginia and other major data center markets over the last two months, as utilities and the world’s largest data center users go all-in on the still commercially unproven technology. 

Enthusiasm for SMRs, sometimes called microreactors, has pervaded the data center ecosystem for some time. Closer in scale to the power plant on a Navy submarine than a traditional utility-owned nuclear power station, SMRs have been held up as a potential silver bullet for the increasingly acute power crisis facing the data center industry that has pushed wait times for connections to regional power grids to more than 10 years while utilities scramble to build transmission lines. 

These decade-long timelines for power are at the heart of why tech giants like Amazon and Google are suddenly throwing real resources toward building modular nuclear reactors near data center sites.

Some of the SMR projects announced in recent weeks have delivery targets as close as six years away. And while there are questions as to whether these timelines are realistic, the data center industry’s largest players have proven willing to make big bets that the answer to their transmission problem is to bring the nuclear reactor to the data center. 

“People have used the phrase ‘bring your own beer,’ and in this case, you’re going to have to bring your own power,” Colm Shorten, senior director of JLL’s data center team, said on the firm’s Trends & Insights podcast this week. “You can bring that power to the site a lot quicker.”

Days before Appalachian Power unveiled its SMR plans in Virginia, microreactor firm Oklo announced it had signed letters of intent with a pair of unnamed data center firms to provide as much as 750 megawatts of power. The deal comes on the heels of previous agreements Oklo signed with data center REIT Equinix and hyperscale campus developer Prometheus for a combined 600 MW. 

In October, Amazon signed an agreement with utility consortium Energy Northwest to fund the development of as many as eight SMRs in Richland, Washington, with the first reactors expected by the early 2030s. Amazon also made a major investment in X-energy, the firm whose reactors will be used for the project. The $500M financing round is intended to expand manufacturing capacity to support 5 gigawatts of new projects by 2039.

Additionally, Amazon signed an SMR agreement with Dominion Energy, the primary power provider serving the data center industry’s largest market, Northern Virginia. The tech giant and utility will explore a potential SMR project near Dominion’s North Anna nuclear power plant that would produce up to 300 MW of electricity.

Google also signed a major SMR deal last month, inking an agreement with Kairos Energy to purchase energy from as many as seven SMRs deployed across multiple U.S. markets. Kairos, which began construction of a demonstration reactor in Tennessee in July, indicated the Google deal will produce close to 500 MW, with the first reactors deployed by 2030. 

In September, Oracle founder Larry Ellison told investors that the firm is planning a gigawatt-scale campus that will be powered by three SMRs. While Ellison provided few details, he said the company had obtained building permits for the SMRs and expected construction to begin quickly.

SMR proponents like OpenAI founder and Oklo backer Sam Altman say this growing pipeline of data center projects powered by small-scale nuclear reactors is just “the tip of an iceberg.”

Oklo Head of Business Development Brian Gitt, speaking on JLL's podcast this week, said the firm is engaged in late-stage negotiations on projects totaling 5 GW of capacity, with 95% of that pipeline coming from data centers.

Ryan Duncan, head of government relations at SMR firm Last Energy, told Bisnow in June that the company was already seeing rapid growth in the number of data center firms looking to engage around specific contract terms, locations and timelines.  

“These conversations are happening all the time,” Duncan said. “Our commercial team is constantly meeting with both the big names and the small names because there’s so much interest in nuclear for data centers right now.”

Still, it remains far from certain that SMRs will be powering data centers on as short a timeline as some of the recent project announcements suggest — or even at any point in the foreseeable future. 

Questions remain as to whether SMRs can be manufactured and deployed cheaply enough to be commercially viable in the U.S., something that has yet to happen. 

Similarly, there is uncertainty around how quickly SMR firms will be able to navigate the multiple federal regulatory processes needed to bring their reactor designs to market or even to build manufacturing facilities. While there have been federal efforts to streamline these processes, federal regulators have yet to approve designs from even high-profile firms like Oklo.

On top of the potential delays at the federal level, leaders in both the data center and nuclear industries say this first wave of SMR-powered projects faces a major unknown: how much resistance these projects will encounter at the local level. 

Although the SMRs proposed for commercial use are thought to have a vastly lower risk of environmental catastrophe compared to traditional nuclear power plants, they expect these projects will encounter significant pushback from a public that widely associated nuclear power with the disasters at Three Mile Island, Fukushima and Chernobyl. 

With data center developers already experiencing rising community opposition to projects that don’t have nuclear reactors attached to them, Oklo’s Gitt said a public relations effort will be required to ensure that local pushback doesn’t stall the nuclear data center movement in its tracks.  

“[We] have a lot of work to do to educate people and bring them up to speed,” Gitt said. “We do have challenges to overcome. Locally, we have to educate people.”