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A Holistic Approach to Powering Data Centers • Virginia Mercury

A Holistic Approach to Powering Data Centers • Virginia Mercury

Virginia, home to the nation’s largest concentration of data centers, is facing a critical juncture in its energy future. As the demand for data storage and processing grows, so does the need for reliable, sustainable, and affordable energy to power these facilities, the largest of which are more than 100 megawatts (MW) of power. That’s equivalent to the production of a single large utility-scale facility – enough to power tens of thousands of homes. The rise of AI will greatly increase the power needs of data centers.

What on earth do we do with data centers now?

Policymakers and energy suppliers are exploring the potential of small modular reactors (SMRs) to meet the growing energy needs of the data center industry. While SMRs offer the potential for clean, reliable energy, their development and implementation face significant challenges and limitations.

SMRs are a type of nuclear reactor that are smaller in size and power than traditional nuclear power plants. They are modular by design, meaning they can be built at the factory and transported to the installation site, potentially reducing construction time and costs. SMRs typically have a power rating of around 300 MW (MW) and can be used for a variety of applications. An obvious one is electricity production to power megawatt-hungry data centers. In 2022, Governor Glenn Youngkin suggested that the state’s first SMR would be built in Southwest Virginia, but in March the governor decided reverse courseand the focus has shifted to areas with more established nuclear infrastructure.

The industry is gearing up to potentially deploy SMRs as part of the data center power stack. Stakeholders certainly took notice when Microsoft began a nationwide search for a “head program manager for nuclear energy and when announced in January 2024 that it had hired directors of Nuclear Technologies and Nuclear Acceleration.

As Virginia navigates this complex energy landscape, a sensibly balanced approach is crucial. SMRs are not a panacea. We must continue to recognize the critical role of solar energy and other renewable sources in our state’s energy mix. Only by embracing a diverse and inclusive energy strategy can Virginia meet the demands of the rapidly growing data center industry while ensuring a sustainable and prosperous future for all Virginians. Additionally, this embrace of diversity will be critical for Dominion Energy to meet the regulatory requirement under the Virginia Clean Economy Act to produce 100% of its energy from renewable sources by 2045.

The risks of over-reliance on SMRs

While SMRs are a promising avenue for clean energy production, it is essential to recognize that they are not a silver bullet to Virginia’s energy challenges. One of the key risks associated with an overemphasis on SMRs is that this technology could – years away from becoming a reality – be used as a pretext to block the development of solar projects in Virginia’s rural counties.

In recent years, there has been increasing opposition to solar energy development in many rural communities across the state. As I noted in a previous one commentary piece for the Virginia Mercury: “A clear trend has emerged of Virginia counties purposefully limiting their own options. An increasing number of them are imposing explicit moratoriums or near-bans on solar energy development.” This opposition is often rooted in concerns about the impact of solar projects on local land use, property values ​​and aesthetics. An often-cited argument from the opposition is that the energy produced on these rural farms is “simply sent to Northern Virginia.”

The promise of SMRs threatens to exacerbate this trend by giving opponents of solar development a new argument to justify their position. They could argue that with the RBEs on the horizon, there is no longer a need to invest in solar projects that could reportedly have negative impacts on local communities. However, this reasoning ignores the fact that SMRs are still years – perhaps twenty years away – from widespread implementation and face significant licensing challenges. When locations are identified, they will almost certainly face local ‘NIMBY’ opposition themselves. It’s also worth noting that the electricity production of one SMR is roughly equal to that of two orange solar farms – hardly the kind of production where solar energy comes into play.

Virginia lawmakers recently authorized Dominion Energy and Appalachian Power to move forward with initial development efforts for two nuclear reactors, but as Virginia Mercury columnist Ivy Main colorfully noted“This is not a solution. It’s like scheduling knee surgery for next year if you have a heart attack today.”

Therefore, curbing the current development of reliable, cost-effective renewable energy and overemphasizing the current significance of SMRs in meeting Virginia’s energy needs could put Virginia in a very precarious position.

A plea for a balanced, holistic energy approach

To meet the growing energy needs of Virginia’s data center industry while ensuring a sustainable and resilient energy future, it is essential that we take a balanced, holistic approach that embraces a diverse mix of energy sources. This approach should include a combination of SMRs, solar energy and other renewable sources such as wind and hydropower, as well as energy from fossil fuels. Fossil fuels still play an important role in Virginia’s energy mix and will likely continue to do so for the foreseeable future, even as they gradually become less important. It is unrealistic to suggest otherwise.

Although promising, SMRs face significant challenges that could delay their widespread implementation even after two decades. First, such projects face significant permitting challenges at the state and federal levels, including from the Nuclear Energy Regulatory Commission, whose processes include extensive review of safety, environmental, waste management and other issues related to nuclear projects.

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Nuclear energy is also expensive, especially compared to solar energy. According to a Analysis from 2023 According to Lazard, a financial advisory and asset management company, the cost of generating electricity from new nuclear power plants in the United States is significantly higher than the cost of solar energy, even when accounting for energy storage. Lazard estimates that the unsubsidized levelized electricity cost (LCOE) of new nuclear power plants will be between $141 and $221 per megawatt hour (MWh).

In contrast, Lazard expects the unsubsidized LCOE for newly constructed utility-scale solar facilities to be between $24 and $96 per MWh. This means that on average it will likely be solar with storage less than half the cost of the electricity generated by new nuclear power plants. (It is fair to acknowledge that these costs are current estimates and that nuclear power could become more cost-effective over time, for example through improved technology.)

These cost differences have significant implications for Virginia’s energy future. By prioritizing solar energy development now, the state can not only reduce its carbon footprint, but also ensure that electricity remains affordable for consumers and businesses. Additionally, the lower cost of solar energy can help attract new industries and businesses to the state, spurring economic growth and job creation.

Ultimately, the key to Virginia’s energy future lies not in a false choice between SMRs and solar, but in a comprehensive approach that recognizes the strengths and limitations of each energy source, plus traditional energy sources, as we work to reduce our dependence of fossil fuels. and reducing our carbon footprint over time. Instead of either/or when it comes to energy, let’s focus on all of the above.

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