How Small Modular Nuclear Reactors Can Power America's Data Centers

Published: 10-11-23    Category: Environmental

MyEListings' markets and economics editor and creates content about global macro events and their impact on US commercial real estate.

the nuclear symbol over nuclear fuel pellets

The digital age is fueled by data, and data centers are quickly becoming its backbone. The increasing demand for data storage and processing comes with an increased need for energy.

This demand has led innovators to explore sustainable and efficient energy sources, one of which is the concept of Small Modular Nuclear Reactors (SMRs).

As the name suggests, these are compact versions of traditional nuclear reactors and are poised to transform not just the data center industry but many facets of commercial real estate.

Understanding Small Modular Nuclear Reactors (SMRs)

Unlike the colossal nuclear reactors of old, SMRs are smaller in size, typically with a capacity of 300 MWe or less.

This downsizing doesn't translate to reduced efficiency, however. On the contrary, their modular technology allows for factory-based manufacturing, leading to standardized designs and potentially more rapid deployment.

The smaller design also lends itself to scalability, making it easier to adapt to varying energy needs.

Why Data Centers Stand to Benefit

Data centers require a continuous and dependable power source. Any interruptions or downtime can result in significant losses and disrupted services, requiring multiple layers of redundancy. SMRs promise a steady, sustainable, and reliable energy source.

Their modular design means they can be placed closer to the data centers, reducing energy loss through transmission, which average 5% to 6% of the total.

Moreover, the environmental footprint of SMRs is minimal compared to traditional energy sources. In a world pressing toward sustainable solutions, SMRs offer an eco-friendly option for power-intensive industries, like data centers.

Beyond Data Centers: A Bright Future for Commercial Real Estate

If SMRs can successfully fuel the energy-intensive world of data centers, the applications for other industries, and the physical structures that contain them, are even more vast.

Consider commercial real estate, which requires heating, cooling, and power for operations. Many large commercial buildings require exclusive facilities for their energy needs derived from the grid, often backed up by diesel or natural gas-burning generators.

As SMRs become more cost-effective and their implementation becomes more widespread, we can envision a scenario where shopping complexes, office buildings, and even residential complexes are powered efficiently and primarily by local SMRs.

The Bigger Picture: A Revolution in Energy Consumption

Adopting SMRs on a larger scale paints a promising picture for our energy future. If cities and industries begin to enlist SMRs for their energy needs, we could see a significant reduction in greenhouse gas emissions as well as greater efficiencies in production and consumption.

Moreover, such an outcome could establish for the global public whether reducing emissions actually produces the advertised effects of a reduction in global temperatures or spawns its own butterfly-effect-like outcomes, thwarting directed human influence over systemic climate output.

Additionally, as economies of scale kick in and the costs of SMR production decline, the promise of affordable, sustainable energy could at last be within our grasp.

Cost Surges Likely Temporary

As interest in SMRs has increased, demand has spiked against comparatively immobile supply, increasing costs of production as well as of nuclear fuel; these spikes are likely to be temporary, however.

With over 80 competing designs at present and regulatory constraints which limit the speed of production, costs are likely to decrease in time from the nearly $400 per MwH figure to which they've escalated, toward the average $50 to $60 per MwH that solar and onshore wind currently cost, respectively.

The Key Takeaway

Small modular nuclear reactors have the potential to be game-changers in the world of energy production. As data centers begin to tap into this potential, other industries could soon follow suit, ushering in a new era of sustainable, cost-effective, and efficient energy consumption.

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