Will Nuclear Energy Be in Your Building’s Future?

• November 19, 2024

Energy demand is surging and will grow exponentially in the next few years. It’s clear that existing infrastructure is inadequate to meet the need. Alarms should be going off, but I’m worried that businesses and governments aren’t being proactive enough in responding. We need realistic, forward-thinking solutions to solve this growing crisis. We need nuclear power. 

First, let’s make sure we understand the problem. It starts where spiking demand meets an ailing power grid. For example, Central Development has recently had city governments and utilities asking for proof to justify the demand at some of our buildings. They’re making it harder to get the power my tenants need. I’ve also felt the impact during outages at my home in the Denver Metro. I’ve already powered up my generators twice this year. 

The power grid is having a hard time meeting demand, and I’m concerned for my tenants and buildings. While every business is at risk of disruption from power outages, limitations, or unreliability, businesses like data centers, manufacturers, defense contractors, and hospitals really can’t afford to lose power. Central Development has tenants and owners in the first three sectors. We also have experience constructing data centers and other buildings with high power requirements (e.g., EdgeConneX, TIAA, Cahners Publishing), giving us a solid understanding of their needs. 

Typical backup solutions aren’t good enough. Generators and batteries will always be part of backup systems, but both options are expensive and won’t work for long periods of time. If the municipal grid doesn’t have capacity or goes down, nuclear power is a better answer. That’s why I believe that, within the next two to three years, nuclear power will be a growing part of my business and buildings. 

Before we look at why nuclear power is the right answer, why is energy demand growing so fast? AI, machine learning, big data, cloud computing, and the Internet of Things (IoT) all rely on increased computing power. Digital data needs storing and processing, requiring more data center capacity. AI in particular is driving massive demand: EPRI’s 2024 report Powering Intelligence: Analyzing Artificial Intelligence and Data Center Energy Consumption estimated that AI queries require 10x the electricity of traditional Google queries. Data centers have to evolve to meet this need.

Data centers aren’t the only reason demand is increasing. As the economic outlook improves, societies, governments, businesses, and consumers will keep moving toward increased electrification of transportation and buildings. In particular, electric heat (e.g., heat pumps, radiant, baseboard) is adding to the demand that many municipalities are considering and the grid can’t support. Electric heat typically doubles a building’s power demands.

In any case, increasing data center capacity and reliability is core to meeting the demand. The International Energy Agency’s Electricity 2024 predicted that electricity consumption from data centers, AI, and the cryptocurrency sector could double by 2026. Huawei’s Data Center 2030 estimated that demand for computing power will increase by a factor of 100 over the next 10 years. The report also stated, “In the intelligent world to come, demand for computing power will be unprecedented, and data centers will become the world’s most critical infrastructure.” 

Current infrastructure can’t meet the demand. In an excellent DataCenter Knowledge article, data center industry expert and analyst Bill Kleyman said, “The pace of our technological evolution is quickly becoming unsustainable.” There isn’t enough clean energy to support the fast-growing needs. Kleyman talked to utility providers saying they’d have to increase output from coal-powered energy plants to support the new use cases. 

Kleyman’s article also quoted the Global Energy Center’s Andrew Bochman, who said, “We are in mid-2024 and entering what some call the ‘electrification gauntlet.’ It consists of a creaky old electric grid about to be asked to support a motherload of new workloads intended to assist in decarbonizing and shoring up the economy.”

So what’s the solution? Along with renewables like solar and wind, stable, efficient, clean, and safe nuclear technologies will play a critical role in solving the demand. As U.S. Secretary of Energy Jennifer Granholm said, “Nuclear power is our single largest source of carbon-free electricity.” Nuclear energy can supply an uninterrupted flow of electricity, even in extreme weather conditions — without producing any GHG emissions. The faster we support nuclear energy, the faster we’ll reach a real solution to the power crisis.

Let’s talk about the elephant in the room: Nuclear energy is safe. Today’s nuclear plants and technologies are built with redundant safety systems under rigorous oversight. Modern reactor designs have further reduced risks. That’s why both big tech and the U.S. government are investing in nuclear energy. 

Big tech is locating data centers next to nuclear facilities. For example, Microsoft signed a deal with Constellation Energy to resurrect part of the Three Mile Island nuclear plant. Amazon acquired a data hub directly connected to the Susquehanna Steam Electric Station nuclear plant, also working with Constellation. These deals face significant regulatory and other hurdles, and are years from being operational. At the time of publication, regulators have blocked Amazon’s deal. But big tech sees the need and is planning ahead. 

The U.S. Department of Energy is investing in developing affordable reactor technologies, and energy companies are creating solutions. Small modular reactors (SMRs) have much smaller operating capacities (~20–400 MW versus the 400–1,000 MW output of large-scale reactors) and footprints (about two football fields) and don’t need refueling for up to eight years. SMRs can be assembled in factories, transported to different locations, and expanded modularly as power needs grow. Microreactors — very small SMRs that can deliver 1–20 MW — are being developed by companies such as Last Energy, NanoNuclear Energy, and Westinghouse. Microreactors can be used to provide uninterrupted power and cooling to data centers, manufacturers, defense operations, hospitals, and other organizations, even in remote locations. These are the reactors I expect to see in my buildings. 

These developments are a move in the right direction. But we need to recognize how much and how fast demand is growing. In the past, 10-20 MW of power could supply a 200,000 SF data center. According to businessman and investor Kevin O’Leary, that number has grown to 100 MW in recent years and is moving toward 500 MW with AI. As O’Leary said on Fox Business, “In two years [data centers] are going to need a gigawatt. The amount of power available in any state is a fraction of that. Right now the demand is 30 GW of data centers in the next 24 to 36 months, and we only have 5 GW on the books, maybe. So if you go to a state and say, look, I want to get 500 MW of power, they can’t do it. They don’t have it. They don’t have the infrastructure for it… This is the biggest problem we have in terms of staying ahead in AI, particularly for defense.” 

In a 2024 talk at the University of North Dakota, O’Leary said, “The new oil is data. If you end up owning the data center, most people are going to have all of their data at nexus places like this. And that’s extremely valuable.” The world needs more data centers, but all of these data centers will need massive amounts of energy.

Interest in nuclear energy is growing in the data center sector. Forward-looking leaders are starting to understand that it may be the only realistic path forward. Kleyman predicted back in 2022 that SMRs would be active in the data center space within five to seven years. I think he’s right. I also think that some of my other tenants and owners — as well as brokers, developers, and any business with growing power needs requiring reliable, uninterrupted power — should start better understanding how power needs are growing and closely tracking the progress of microreactors and SMRs. 

This crisis won’t go away. We create more data every day, and the world is moving toward greater demand for electricity — not less. It’s time to embrace nuclear energy. I know I will, because in a few years, it may be the only viable solution for some of my tenants and buildings.

As seen in Mile High CRE.