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When the data center industry comes together, power is on everyone’s mind

Power – where to get it and how – was a major theme at the annual Data Center World conference in Washington, D.C.
When the data center industry comes together, power is on everyone’s mind

Onlookers lined the street outside the Walter E. Washington Convention Center in Washington D.C. last month as Last Energy suspended a 22-ton prototype of its small modular reactor from a crane.

The D.C.-based nuclear startup aimed to make a big statement at Data Center World, one of the premiere conferences in the data center industry.

“Seeing it in real life, in our home city is incredible,” said Michael Crabb, Sr. Vice President of Commercial for Last Energy.

The pitch Last Energy is making is that its 20 MW pressurized water reactor can meet the power needs of data center customers, who can’t possibly get enough power these days.

“There are a host of data center developers that are trying to build projects in our target markets and maybe they can’t get power,” said Crabb. “Those are customers that we want to demonstrate our ability to build stuff in real life and work with them to help solve their problems.”

It is the least well-kept secret in both the power and data center industries that the latter will need plenty of the former, especially with the rise of artificial intelligence. The demands of AI require robust and scalable computing infrastructure, which data centers provide.

As Power Engineering has reported extensively, data centers will consume a growing share of electricity in the U.S., with no signs of slowing down. McKinsey & Company predicts these operations will double their U.S. electric demands, from 17 GW in 2022 to 35 GW by 2030.

Utilities are feeling the squeeze and are updating their load growth forecasts accordingly.

Dominion Energy has connected 94 data centers totaling over four GW of capacity over the last approximately five years, its CEO recently told investors. The utility’s territory includes Northern Virginia, which is the largest and most dynamic data center market in the world.

According to the company’s annual report filed with regulators earlier this year, data centers represented 24% and 21% of Dominion’s electricity sales in 2023 and 2022, respectively.

Demand isn’t limited to historically strong data center markets, either. Because Ohio is seeing unprecedented demand from data center customers, American Electric Power (AEP) recently filed a proposal with state regulators requiring new data centers with loads greater than 25 MW to agree to meet certain requirements before infrastructure is constructed to serve them.

Under AEP’s proposal, data centers would be required to make a 10-year commitment to pay for a minimum of 90% of the energy they say they need each month – even if they use less.

Another trend is the growing size of each data center. It’s no longer uncommon to see these companies asking for 500 MW of power for a single campus. Dominion noted it is receiving requests to power larger data center campuses that require total capacity ranging from 300 MW to as many as “several gigawatts.”

The exhibit hall at Data Center World.

All of this provides the backdrop for the conversation at conferences like Data Center World, where data center developers, operators, service providers, regulators, and increasingly, stakeholders in the power sector come together to confront these challenges collectively.

In one conversation about the evolving policy landscape surrounding data centers, panelists noted a paradigm shift where developers are leaving traditional data center markets that have become power-constrained and following the power source, rather than the other way around, like it used to be. After all, data centers could face years of delays for a firm grid connection while transmission and other infrastructure get built.

Chris Curtis, Global Head of Data Centers for Prologis, a logistics real estate company with a data center arm, said this shift of following the power has really accelerated over the 12 to 18 months.

“I think now you’re seeing a lot of potential sites that are could not only be markets, but also, frankly, off the beaten path,” he said.

Nuclear power could be a match

Last Energy was not the only advanced nuclear company in attendance at Data Center World. Data center developers increasingly view around-the-clock nuclear power as a good match for their similarly around-the-clock needs, and this was another theme at the conference.

Panel discussions included education for data center companies on key challenges like nuclear’s regulatory hurdles, long project timelines, community engagement and the need for strategic partnerships.

“Data centers sound simple, but I’m learning are absolutely not,” said Christine King, Director of Gateway for Accelerated Innovation in Nuclear (GAIN) at Idaho National Laboratory (INL). “So maybe we’re good partners as well.”

King managed expectations by saying that while more than three dozen small modular reactor (SMR) and microreactor projects have been announced, a majority are MOUs and may never reach commercial viability.

She added another challenge is scaling up these advanced nuclear projects. Investor-owned utilities, the entities capable of taking on projects of this magnitude, don’t always want to be an early mover and take on the financial risk, King said.

“We have a lot of fence sitting going on to be quite honest with you. We have a lot of customers like you who know that you need nuclear,” she told the audience. “We have utilities that have put nuclear into their integrated resource plans. They don’t want to be second, third or fourth. They want to buy the ‘nth of a kind’ unit.”

One member of the audience, a VP of Innovation at a leading data center solution company, said his company has multiple “1500 to 2000 MW campuses” in its development pipeline over the next three years.

Regarding small modular reactors, he said his company was “highly interested.” However, he expressed trepidation about nuclear’s long lead times.

“We’re very optimistic that when it gets here, it’s going to be great,” he said. “But we’re really not sure, in the meantime, where are we at really, and that gets us nervous when we’ve got these big things in front of us.”

That gets us to the more immediate: How will data centers get power as they wait for a grid hookup or before emerging technologies are ready for prime time? That was another major topic at the conference.

The solution could be onsite generation or power through a microgrid.

Todd House, a panelist representing CyrusOne, a wholesale data center operator, said the company’s preference is grid power.

“We, as a data center operator, really don’t want to be in the power plant, onsite gen or behind-the-meter generation sort of skillset, that’s not our core capability,” said House.

That said, he added a lot of data center operators are now looking at this option more seriously due to power-constrained markets.

“Oftentimes, it’s by necessity,” he said.