Nuclear energy’s role in powering data center growth
As the electric power sector looks to address rising power demand from data centers to drive artificial intelligence growth, nuclear energy appears to be emerging as an attractive option
Kate Hardin
Patricia Tuite
Martin Stansbury
Jaya Nagdeo
After decades of relatively stable electricity demand, the United States is now experiencing a surge in power consumption, driven primarily by the rapid growth of data centers and compounded by industrial modernization. As data centers increase in both size and number, their projected energy consumption is likely to skyrocket, which could place immense pressure on existing energy resources and infrastructure. According to Deloitte estimates, the data center electricity demand could rise five-fold by 2035, reaching 176 GW (figure 1).1
The nuclear advantage
Nuclear energy presents a potential solution for meeting some of the growing electricity demands of data centers, with its reliable and clean energy profile. It provided over 19% of the United States’ electricity in 2024, despite representing less than 8% of the nation’s total operating capacity.2 Some potential advantages include:
- Reliable baseload power: Nuclear power plants provide firm baseload power, operating 24/7 regardless of weather conditions. Their capacity factor, exceeding 92.5%, outperforms other sources like natural gas (56%) and renewables like wind (35%) and solar (25%).3 This reliability is important for data centers, helping to ensure uninterrupted operations and maximize return on investments, especially for AI and generative AI applications.
- High energy density: Nuclear fuel boasts a high energy density. A small amount of nuclear fuel can generate a vast amount of electricity, minimizing fuel storage requirements and reducing transportation needs. This efficiency can translate to a smaller physical footprint and enhanced sustainability.
- Scalable power output: A single nuclear reactor typically generates 800 megawatts (MW) or more of electricity, readily meeting the power demands of even the largest data centers (50 MW to 100 MW) and the burgeoning requirements of AI-focused facilities (up to 5,000 MW).4
- Low-carbon emissions: Nuclear power is a clean energy source that produces virtually no greenhouse gas emissions during operation.5
- Enhanced land use efficiency: Nuclear power plants require relatively small land areas compared to other energy sources.6 This efficiency is important for data center colocation and can help to optimize land use and minimize environmental impact.
Data center power demand could rise five-fold by 2035, reaching 176 GW.
Addressing data center demand
Deloitte analysis indicates that new nuclear power capacity could potentially meet about 10% of the projected increase in data center power demand over the next decade (figure 2).7 This estimate is based on a significant expansion of nuclear capacity, ranging between 35 gigawatts (GW) and 62 GW during the same period.8
Several strategies can help support this nuclear growth.
- Optimizing existing capacity: The United States has 94 operating reactors, with an average age of 42 years.9 Over 80% of these reactors have already been relicensed to operate for up to 60 years or even 80 years with a subsequent license renewal.10 Power uprates, which involve modifications such as improving fuel design, optimizing operating parameters, or upgrading equipment, could further boost capacity. The cumulative uprates from 1977 to 2021 amount to 8,030 MW, averaging about 0.18 GW per year over 44 years.11
- Revitalizing existing sites: Bringing previously closed plants back online could offer a cost-effective option. For instance, the estimated cost of restarting three nuclear plants with a combined capacity of 2 GW is approximately US$6.2 billion, significantly cheaper than the US$37 billion required for constructing a new plant of similar capacity.12 Building new reactors at existing nuclear and coal sites offers another avenue for growth by taking advantage of existing infrastructure and streamlined licensing processes. About 60 GW to 95 GW of new nuclear capacity could leverage existing nuclear sites, thereby helping reduce costs and construction timelines.13 Repurposing retired coal plants for nuclear power can yield capital expenditure savings of 15% to 34%.14 A 2024 study estimates that there is potential to retrofit 128 GW to 174 GW of nuclear capacity at operating and retired coal plants.15 At least 11 states have publicly expressed interest in this approach.16
- Deploying advanced technologies: Small modular reactors (SMRs) are smaller, factory-built reactors that offer some advantages over traditional nuclear (see “Small modular reactors offer multiple benefits over traditional nuclear reactors”). Additionally, they offer black start capability, islanding, underground construction, fuel security, and continuous operation, making them highly resilient and suitable for infrastructure like data centers.17 Some industry stakeholders are exploring these technologies to expand nuclear’s potential and are looking at ways to advance SMR development. Additionally, industry and academia are collaborating to expand research and development.18 Beyond SMRs, next-generation reactor designs enhance safety, efficiency, and fuel utilization, and microreactors offer unique advantages for remote locations, off-grid applications, and specialized energy needs, making them viable options for powering data centers.19
Small modular reactors offer multiple benefits over traditional nuclear reactors
SMRs are advanced nuclear reactors that are physically a fraction of the size of a conventional nuclear power reactor, allowing systems and components to be factory assembled and transported as a unit to a location for installation. They have relative benefits over conventional nuclear reactors for some applications and are particularly well-suited to meet data center power demand.
- Their smaller size and modular design can translate to lower upfront capital costs. Factory fabrication leads to economies of scale and improved quality control. Shorter construction times (two to three years) reduce financing costs. Ultimately, SMRs are projected to be cost-competitive with other clean energy sources over their lifetime.20 Additionally, their modular nature can allow for incremental deployment, adding capacity as needed to match specific energy demands.
- SMRs drastically reduce construction timelines. Their modular design allows for factory fabrication of most components, minimizing on-site labor. This leads to faster deployment, with projected construction times of two to three years, compared to five to 10 or more years for large reactors.21
- SMRs offer good siting flexibility. Their smaller footprint allows them to be located on sites unsuitable for large reactors, including brownfield sites like decommissioned coal plants. This leverages existing infrastructure (grid connections, cooling water) and potentially reduces community opposition.22
- SMRs prioritize enhanced safety. Many designs incorporate passive safety systems (gravity, natural circulation), potentially reducing the need for operator intervention. The smaller core and lower power density further minimize risks. Some designs even incorporate underground construction for added protection.23
Scaling nuclear energy
Public opinion on nuclear power in the United States is complex and evolving, and so the path to scaling it for data center demand is not without challenges.24 However, these can be viewed as opportunities to innovate, collaborate, and accelerate growth.
- Streamlining for speed and efficiency to address construction timelines and cost overruns: Nuclear plants often face challenges related to construction timelines and cost overruns (figure 3), which can hinder their economic viability and competitiveness with other energy sources.25 One recently commercialized project saw a cost overrun of more than 114% and a delay of six years.26
Multiple factors are at play, such as complex engineering and construction processes and lengthy licensing and approval processes. Another aspect is that the United States has over 50 different commercial reactor designs.27 This can lead to “first-of-a-kind” challenges, where a lack of prior experience can lead to unexpected problems during design and construction. Additionally, nuclear projects are often large scale and complex, requiring significant upfront investment and lengthy construction periods.28
In 2024, the capital expenditure to develop nuclear facilities ranged from US$6,417 to US$12,681 per kilowatt (kW), while that of natural gas facilities was about US$1,290 per kW.29 Advancements in modular construction, digital twins, and advanced project management can be leveraged to help streamline construction processes and improve efficiency. Pushing for standardization of designs could help reduce the first-of-a-kind engineering costs and could lead to greater predictability in project outcomes.
- Innovating to address safety and waste management: Waste is produced throughout the nuclear fuel cycle, from mining and enrichment to reactor operation and the decommissioning of facilities. Currently, the United States does not have a permanent disposal solution for high-level radioactive waste.30 Additionally, advanced SMR designs—such as those utilizing metallic, carbide, nitride, or particle fuels—introduce new challenges in waste processing, transportation, and disposal.31 Deloitte’s 2024 power and utilities industry survey respondents recognized waste management and disposal concerns and high initial capital costs as the top challenges to the adoption of advanced nuclear technology.32 Innovation in advanced recycling technologies and alternative waste management strategies could help alleviate some of these concerns.
- Securing domestic capabilities to address the nuclear fuel supply dependency: The United States faces significant reliance on foreign sources, particularly Russia and China, for enriched uranium, posing challenges to its energy security and the development of advanced nuclear reactors (figure 4).33 High-assay low-enriched uranium (HALEU) is essential for next-generation reactors, but domestic production capacity and infrastructure remain insufficient, threatening progress toward meeting future energy demands.34 In February 2024, the US Senate approved US$2.7 billion in funding for domestic enrichment capabilities, to expand production of conventional low-enriched uranium (LEU), and high-assay low-enriched uranium (HALEU).35 Apart from fuel, in the component supply chain, manufacturing capacity and capability for large components is a concern for nuclear in the United States.36
- Building the nuclear workforce of tomorrow: Currently, the industry has a workforce of about approximately 100,000 and is expected to increase to 375,000 by 2050, a 275% increase over 2024.37 At the same time, the nuclear industry is facing a maturing workforce, with 17% of workers in the industry over the age of 55 and 60% of workers ages 30 to 54, exceeding the overall energy sector (52%).38 Conversely, the proportion of workers under the age of 30 was 23%, lower than the percentage for the overall energy workforce (29%).39 This age distribution indicates that a large number of retirements are expected within the next decade, creating a considerable demand for younger, skilled workers. Both industry and government may need to come together to address this issue. As of 2024, 76% of the Department of Energy’s science, technology, engineering, and math workforce programming investments target nuclear.40
Nuclear’s new era: Collaboration, innovation, and market evolution
Nuclear energy is poised to play a transformative role in powering data centers. Realizing this potential may demand simultaneous action from various stakeholders.
- Strategic partnerships and investment: Nontraditional market entrants, such as technology companies, private equity firms, and specialized energy developers, can help bring capital and technological expertise to the nuclear sector. Through strategic partnerships and mergers and acquisitions, the development and deployment of nuclear technologies can be accelerated. In 2024, the total global deal value of private investments in advanced nuclear companies surpassed the combined value of such deals over the preceding 15 years, reflecting the growing confidence and commitment of private investors in the sector.41
- Financial innovation and market accessibility: Innovative business models, such as power purchase agreements with data centers and leasing models for SMRs, could help to reduce financial barriers and accelerate the deployment of nuclear technologies. For instance, some tech companies are partnering with advanced reactor developers and utility companies by signing power purchase agreements to aid finance and reduce project risks.42 Additionally, international collaborations, such as Generation IV international forum, are fostering research and development of advanced nuclear technologies, which enable them to pool resources and expertise.43
- Industry-academia synergy: Stakeholders in industry and academia could leverage their individual strengths for collaborative outcomes, including innovation and efficiency. For example, educational institutions can help advance new nuclear technologies, enable job training, improve manufacturing processes, streamline project management, and build a robust pipeline of nuclear engineers and skilled professionals. They can also play a crucial role in research and development, talent development, and public education. For example, Massachusetts Institute of Technology’s nuclear reactor laboratory collaborated with advanced reactor companies on research related to their designs and advanced fuels.44
- Policy action: Governments could consider streamlining licensing processes and explore financial incentives for nuclear energy projects. For example, the bipartisan Accelerating Deployment of Versatile, Advanced Nuclear for Clean Energy Act 2024 aims to help expedite the licensing of advanced nuclear reactor facilities by reducing regulatory hurdles and costs.45
- Public engagement: Building public trust and information sharing could help with the growth of nuclear energy. This can include open and transparent communication, proactive engagement with communities, and education on the safety and benefits of nuclear technology. Highlighting the role of nuclear energy in combating environmental impact and ensuring a reliable energy supply could help with public acceptance.