Is nuclear a viable power solution for data centers?

A familiar scene has been playing out across the data center industry: a developer builds a new facility, and the capacity gets leased even before construction is complete. As companies race to keep up with demand for new facilities to store the data that fuels our digital economy and AI models, a major constraint is holding back growth — power availability.

The rapidly expanding data center industry is putting more strain on an electric grid that is already feeling the pressure of electric vehicle adoption, a manufacturing resurgence, aging infrastructure and extreme weather events. Global data center power consumption could reach as high as 1,000 terawatt hours (TWh) in 2026 — more than double what the sector consumed in 2022, according to the International Energy Agency (IEA). In the United States, data center power demand has been growing approximately 20% per year and could exceed grid supply by 2033, according to JLL researchers.

The industry needs to find more power quickly, and many within the data center industry wonder if nuclear energy could hold the answer. Modern nuclear reactors offer safe, sustainable and stable base-load power, all crucial factors for data center operations. However, challenges stand in the way of broader adoption, including regulatory obstacles, cost barriers and public misperceptions about safety.

Can data center operators overcome these hurdles to make nuclear energy a viable energy source? Answering that question starts with understanding how the industry has evolved over the past several decades.

“Newer designs require a lot less operator intervention than the reactors of the past, which reduces the risk of human error and increases reliability and safety."

JLL Research

New nuclear technologies hold much potential, but data centers can also take advantage of existing outputs. According to the World Nuclear Association, nuclear energy supplies about 9% of the world’s electricity today and that number is quickly increasing. The IEA estimates that an additional 29 gigawatts (GW) of nuclear capacity will come online by 2026, increasing global nuclear generation by nearly 10%.

Some data center operators are trying to lock down that capacity by co-locating new facilities next to existing nuclear power plants. In early 2024, a major cloud service provider purchased a 960-megawatt (MW) data center campus adjacent to and directly powered by a nuclear power plant in Pennsylvania. The deal attracted widespread attention, and now several utilities are eyeing similar agreements.

Many view these agreements as a win-win. The data center locks down a stable, long-term power source while avoiding transmission and grid fees, while the utility secures a long-term customer at a price higher than it could charge by selling energy to the grid. However, the arrangements are not without controversy. Opponents of these deals say data centers are removing energy supply from the grid, which could raise prices for other customers and reduce reliability.

"A nuclear reactor is not only carbon-free, but it requires a substantially smaller footprint than wind and solar, and its output isn’t dependent on the weather.”

JLL Research

Despite the many benefits of nuclear energy, building new generating capacity requires navigating a minefield of challenges, including the regulatory landscape.

Each country continues to evolve its stance on nuclear energy and adjust regulations to support the implementation of newer, safer technologies. Asia is the primary driver of nuclear power growth, but political stances vary throughout Europe, according to the IEA. Some countries, such as Germany, are phasing out nuclear power, but 11 other European Union member states launched an alliance to cooperate on nuclear energy and add 50 GW of nuclear capacity by 2050. Meanwhile, the U.S. is providing substantial support for the development of SMRs.

Even in countries with pro-nuclear policies, getting new reactors licensed and approved takes time. The substantial upfront investment required to build new generation is another barrier. So far, funding for advanced technologies such as SMRs and fusion reactors around the globe has come primarily from private equity and venture capital firms.

Companies that successfully jump through the regulatory hoops and secure capital still face another huge challenge — convincing communities that new nuclear projects are safe and clean. The tragic accidents of Chernobyl and Fukushima still loom large. However, these were exceptional events that don't represent the lower risk profile of modern nuclear plants. The industry must effectively communicate how today's nuclear plants are inherently safer and highlight the crucial role nuclear energy can play in achieving a low-carbon future.