A couple decades ago, as the internet boom was just taking hold, data center power demand suddenly became a pressing utility concern. In that precloud-computing time, data centers were much more spread out, with many businesses and institutions hosting their on-site facilities. 

Since then, data processing has become much more consolidated and efficient, but the growth of artificial intelligence (A.I.) promises to  significantly raise computing-related electricity consumption over the next decade. This is leading data center operators to consider their own “nuclear option”—signing deals to co-locate with utility-scale nuclear power plants to support exponentially rising energy demands.

Increased loads

The enormous demand utilities could be facing is outlined in a May 2024 report from the Electric Power Research Institute (EPRI). “Powering Intelligence: Analyzing Artificial Intelligence and Data Center Energy Consumption” outlines three load-growth scenarios where data center energy use climbs to as high as 9.1% of total U.S. generation annually by 2030, versus today’s estimated 4%. 

But those national figures don’t represent the even more significant demand hikes anticipated in areas where data center development is highest. As the authors note, 15 states now account for 80% of the nation’s data center load, with Virginia leading the pack—data centers consumed an estimated quarter of the state’s total power output in 2023. In EPRI’s highest demand-growth scenario, that would climb to 50% by 2030.

A.I.-related data facilities are much larger than previous centers, with demand that once hovered around 100 megawatts (MW) now ranging between 100 MW and 1,000 MW—or enough electricity to support 80,000–800,000 average homes. This is because A.I. processing is much more energy-intensive than, say, standard search engine operations. For example, OpenAI’s ChatGPT service requires 2.9 watt-hours to process a user query, versus just 0.3 watt-hours for a traditional Google search. ChatGPT is text-based, so services generating music, images and video could be even more power-hungry.

Compounding utility difficulties, especially in regions with high data center expansion, is the difference in time required to build facilities versus what’s needed to develop new transmission infrastructure (including lines, substations and other equipment). These structures can be up and ready to go in around two years or so, but new transmission can take four or more years to put in place. Complicating this is the fact that tech leaders behind these efforts also are trying to meet corporate sustainability targets, so there’s a big push to power these structures using carbon-free resources.

Data center designers are certainly doing what they can to push power requirements lower, focusing on more effective server use and innovative high-efficiency cooling systems. But, in the end, these are very energy-intensive facilities to operate, so developers are having to think creatively about where they source their kilowatts. Recently, that’s meant developing exclusive partnerships with nuclear power plant owners. Not long ago, it seemed like low-cost solar and wind generation might be pushing them out of business. Now, though, some are inking deals to co-locate data centers on their properties, or at least very nearby.

Co-location agreements

A new report from the Nuclear Energy Institute outlines these and other benefits such long-term co-location agreements could offer. In place of a standard grid connection, the centers directly connect to the nuclear plant’s output, facilitating easy access to an abundant supply of reliable, emissions-free energy and eliminating the need for more transmission-system buildouts. Plant owners gain a long-term power purchase with predictable revenues that can help insulate them against pricing fluctuations in the open power market.

One of the first such arrangements was recently signed between Amazon World Services, Amazon’s cloud-computing business, and Talen Energy, a Texas-based independent power producer and owner of the Susquehanna nuclear power plant in Luzerne County, Pa. The power company built a 960 MW data center near the plant that it recently sold to Amazon, which also signed a 10-year supply contract with Talen. New Jersey’s PSEG has reported it’s in talks with several data center operators to sell power from its Hope Creek and Salem nuclear plants, possibly under a similar co-location plan.

Nuclear plant stock prices are starting to rise based on possible future agreements with A.I. tech leaders. As of July, shares of Constellation Energy, owner of the nation’s largest nuclear fleet, were up over 80% for the year, in part because it’s considering adding small modular reactors at existing plant sites to directly deliver electricity to large-load customers. Potential roadblocks could come though, as pulling those supplies out of the public market could raise prices.

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