The Nuclear Option: Data Centers and the Responsible Provision of Power

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Insight and analysis on the data center space from industry thought leaders. The Nuclear Option: Data Centers and the Responsible Provision of Power While nuclear power alone won't resolve all friction points, it emerges as a critical enabler of AI at scale while mitigating environmental damage and protecting communities. AI is in the air, and with it comes the question of data centers. We cannot talk about one without invoking the other. There is a fever pitch of energy to build data centers, with the hyperscalers alone pledging something on the order of $600 billion in infrastructure build-out. There is another fever pitch, too – that of communities, academics, activists, and a growing number of technology employees pushing back against what they see as a reckless, environmentally unsafe, and economically devastating metastasis of data centers and AI. To date, these two positions are unreconcilable. From the perspective of AI-driven hyperscalers, the consumer and enterprise use of AI is to be lauded, and, as such, data centers are an essential part of the modern economic and social landscape. From the perspective of communities, data centers use enormous amounts of water, are voracious with power, require land subsidies, and create few jobs. Whatever one’s beliefs, political or otherwise, it is clear that the two sides stand in opposition. It is the view of this author that, indeed, there cannot be perfect alignment. It is also the view of this author that AI skepticism is a good and healthy thing and that, to date, AI has grown, as have data centers, without sufficient humility, democracy, and public debate. Still, on the subject of power, there are ways to bridge the positions partially. To get there, we need to invoke the Nuclear Option. Some predictions suggest that by 2028, data centers will consume up to 12% of total world power production. This is a tripling from the 2023 number of 4.4%. Data centers are generally sourced from the power grid and thus remain operational using the same mix of energy sources that fuel their local power plants. As data centers continue to be built, however, overall usage will more closely match the national mix. As data center build-out internationalizes, power usage will reflect the national mix in the destination countries – like China and India, which are still highly coal-dependent. According to IEA projections, renewables and nuclear energy will go from providing about one-third of data center power to about 60% by 2030. However, that figure is called into question when considering companies like Microsoft that have retreated from their renewable energy pledges. So far, there is no bridge in sight. Until we double-click on the word “nuclear.” Current nuclear power plants, which run on fission, have a vastly greater capacity factor than any other power source. In fact, fission dwarfs any other source. The world of fission, too, is growing and evolving, with SMRs (small modular reactors) in the offing and with a renaissance in investment in the current fleet. Nuclear fusion, too, is on the horizon, with enormous strides being made in the last five years. With over $15 billion in private investment pouring into fusion and over $50 billion in government pledges, the race to achieve Commercially Viable Fusion (CVF) is on. Fusion has 4 times the energy density of fission and doesn’t have the same waste issues. In fact, fusion, should it become commercially and scientifically viable, will provide the world with abundant, clean baseload power. No one should suggest that any power matrix should be 100% nuclear. Still, as the nuclear ratio increases in what I call the “Energy Stack,” many of the demerits of powering data centers are diminished. As they are diminished, so too will the legitimate pushback. No one should suggest that power is the only source of friction, but it is one and has been identified as a gating factor on both sides of the coin. As we examine a range of scenarios, nuclear energy emerges as an important factor in enabling AI at scale while also protecting the environment and communities’ lifestyles. While predictions for the growth of AI and data centers suggest vast expansion, even if the maximalist scenarios don’t come to pass, the Energy Stack will still be front and center.