AI and data center growth equal power demand

April 3, 2024, 9:30AMNuclear NewsKen Petersen

Ken Petersen

Nuclear has been on a good roll lately and it is getting better. The 2022 Inflation Reduction Act (IRA) provides a nuclear power production tax credit. This has stopped the early retirement of deregulated units. The IRA also provides a benefit for the clean production of hydrogen. Many utilities have committed to a net-zero goal by 2050. Duke and other utilities have plans to transition coal plants to nuclear with small modular reactors.

And now, nuclear has a new supporter—tech companies.

The big U.S. utility companies (like Exelon, Duke, Dominion, Southern, and Entergy) are all projecting growth in electricity demand—primarily in the commercial sector but some residential growth is also expected. Commercial growth is being driven by new factories (thank you, IRA and CHIPS, that is, the Creating Helpful Incentives to Produce Semiconductors and Science Act). It is also being driven by data centers.

Major tech companies see artificial intelligence (AI) as something that will transform their industry, and there is a race to be first. When they look for clean, dependable power 24/7, nuclear clearly stands out as a good match.

Constellation summarized it best in its recent forecast:

  • AI and data center growth will drive power demand.
  • Major tech companies are expected to invest $1 trillion in data centers over the next five years.
  • In the next five years, consumers and businesses will generate twice as much data as all the data created over the past 10 years.
  • AI data center racks could require seven times more power than traditional data center racks.
  • Between now and 2030, domestic data center electricity consumption is expected to grow anywhere from 6.5 percent to 7.5 percent (335 terawatt-hours to 390 terawatt-hours).

In its report Data Centers 2024 Global Outlook, global real estate services company JLL has said that “AI is driving extreme scale for new developments with requirements now ranging from 300 megawatts (MW) to over 500 MW.”

According to Andy Cvengros, JLL’s managing director of U.S. data center markets, “In addition to location and design considerations, data center operators are starting to explore alternative power sourcing strategies for on-site power generation, including [SMRs], hydrogen fuel cells, and natural gas. With power grids becoming effectively tapped out and transformers having lead times of over three years, operators will need to innovate.”

This means the grid needs to be strengthened to support data center growth and reliability. They are looking at co-locating the data centers with the existing fleet and new SMRs.

With all of this interest, nuclear has never looked more promising.

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