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Colocation data centers explore the possibility of on-site nuclear power, supplied by SMRs.
With the advent of small modular reactors (SMRs), nuclear-powered data centers are expected to become a reality within the next decade.
Already, several data center campuses plan to colocate with existing nuclear reactors, but the scalable, zero-carbon technology of SMRs expands their possibilities.
The push toward SMRs could especially benefit colocation data centers, which consume more energy to meet the needs of multiple clients.
As the data center industry takes measures to decarbonize, how can SMRs support their efforts—and, more specifically, the needs of colocation data centers?
Also known as a multi-tenant data center or simply a “colo,” a colocation data center provides space for businesses to host computing hardware and servers offsite. These facilities are ideal for companies that lack space for an on-site enterprise center or an IT team to manage one.
Under the colocation model, a third party develops and owns the facility and leases space to multiple businesses. These could include hyperscalers, which operate large-scale data centers for cloud computing platforms and big data storage; or enterprise users, which privately own and design their facilities for optimal connectivity, power, and security. The colocation facility provides power, cooling, security, and networking equipment to multiple tenants, tailored to their business models and data management needs.
The word “colocation” can be used to describe a specific type of data center building, as defined above, but some industry experts make a point to distinguish colocation as a service—not a physical place. As the industry explores the possibility of “colocating” data center campuses with nuclear reactors, these distinctions and language could become more convoluted.
For our purposes, colocation data centers are physical buildings that offer colocation as a service. Depending on proximity to nuclear power plants and/or sites, data centers of all kinds (not just colos) may choose to colocate their facilities with existing power plants or utilize SMRs as a more flexible, long-term strategy to reduce energy consumption.
Despite advances in efficiency, data centers’ collective energy use is significant and growing. This is particularly true for colocation data centers that serve multiple clients, as well as large “hyperscale” data centers led by Amazon, Microsoft, and other global technology companies.
According to the International Energy Association (IEA), these companies have experienced rapid growth in their workloads and energy usage within the past several years. In 2021, combined electricity use by Amazon, Microsoft, Google, and Meta rose to around 72 terawatt hours (TWh). In 2022, global data center electricity consumption was about 1-1.3% of global electricity demand, or 240-340 TWh.
As a measurement, TWh are large enough to express annual electricity use for entire countries, illuminating the role of data centers as electricity users and carbon emitters. Today, these figures must be considered amid growing pressures on colocation data centers (and other large energy consumers) to report their power usage with greater accuracy and transparency.
Like other types of data centers, colocation data centers would benefit from the primary benefits of nuclear power, which uniquely addresses all three dimensions of the energy “trilemma”: affordability, sustainability, and reliability.
Using the trilemma as a guiding framework, some industry leaders advocate for the colocation of data centers with existing nuclear reactors. In this context, colocation is an alternative to building new nuclear plants to run individual data centers: a process that could require years, proper infrastructure and permitting, and substantial upfront capital to complete.
By colocating existing reactors with their facilities, data centers benefit from the carbon and cost savings of nuclear power. While this could be a viable strategy for some data center customers, SMRs expand their possibilities by eliminating the need to locate their facilities near existing power plants.
As the developer of the PWR-20—a 20 megawatt hour (MW) modular microreactor—Last Energy seeks to equip colocation data centers with following the benefits of small, modular, and scalable nuclear power.
Because SMRs are small and site-flexible, they can be deployed widely and built quickly on-site at an existing data center campus. Depending on energy consumption, the number of SMRs can be scaled to meet a data center’s evolving demands.
Scalability is particularly important for colocation data centers, which must accommodate multiple customers in a single, large data center, typically loaning space in 15 to 20 MW tranches at a time.
A developer like Last Energy can deploy standard units of the PWR-20 to match the growth profile of colocation data centers. Last Energy employs the same strategy for other data center customers seeking to build capacity in a sustainable, linear fashion.
This scalability offers a more flexible and cost-effective solution than larger, conventional reactors. Using the PWR-20, colocation data centers can increase their capacity and rent out the compute power while reducing their carbon emissions and maintaining a small geographic footprint.
Beyond these logistical benefits, SMRs also give colos an opportunity to adapt to carbon-free initiatives and sustainability targets, which may soon become fiscal imperatives.
S&P Global reports that under regulatory pressure, data centers will need to meet new technical standards to reduce their energy usage and carbon emissions—even as the global economy digitizes, and the demand for data-related electricity continues to grow.
Failing to meet sustainability targets may lead colocation data centers to lose customers or face carbon taxes that penalize unsustainable practices. Because hyperscalers are major customers for colocation data centers, colocation facilities must meet the appropriate targets or risk losing some of their largest clients.
Against a backdrop of regulatory changes and net-zero carbon goals, the IEA emphasizes the potential of distributed energy resources (DERs): small, scalable energy sources typically situated near sites of electricity use. More mainstream examples of DERs include solar photovoltaic panels, battery storage, and electric vehicles.
DERs are often connected to the distribution portion of the electric grid, which carries electricity to homes and businesses. Distribution differs from traditional energy generation, which connects directly to transmission: the so-called “interstate highway” of electricity that moves electrical power in bulk quickly and across long distances.
Although DERs can facilitate the decarbonization of electricity grids, rapid uptake of DERs can actually challenge grids without adequate preparation. Many DERs are variable renewables, requiring more flexibility and planning to ensure a consistent supply of energy.
SMRs like the PWR-20 act as a DER without the intermittency of renewable energy sources. Deployed strategically and at scale, SMRs supply reliable, baseload power independent of the grid, increasing the resilience of energy systems while reducing energy costs for consumers.
By supplying on-site power, SMRs also address electric interconnection challenges. Interconnection timelines are often impeded by speed to market, high capital costs, and other considerations, which create challenges for colos and other data centers.
As opposed to purchasing power from the utility and reckoning with these challenges, data centers can purchase clean, baseload power from Last Energy and connect directly to the source of power generation, eliminating intermediation by legacy transmission and distribution systems.
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By reducing data centers’ dependence on the grid, DERs like SMRs give colos and data centers of all types the ability to produce and consume electricity in accord with their unique needs and preferences.
These features support ongoing decarbonization efforts and also incentivize nuclear-renewable hybrid energy systems. Hybrid systems supply both low-carbon electricity and nuclear-generated heat with expansive applications, including process heat and district heating.
Deriving 24/7 clean energy and potentially other non-electricity coproducts from SMRs, colos can support the computing hardware and servers of multiple companies and avoid competition for energy with local communities.
As some of the most energy-intensive facilities, colocation data centers have a unique opportunity to integrate technologies like the PWR-20 and influence the sustainability—and, arguably, the long-term viability—of the data center industry.
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