In yet another data center and nuclear story, cloud-based gaming services provide Ubitus KK plans to construct a new data center in Japan – focusing on locations near nuclear power plants for stable and cost-effective electricity.
In this article we tackle the question of ‘how big can this combination get?’ The answer is as much as 90 GW by 2030, almost the size of the US nuclear fleet, if all new growth in data center power demand is met by agreements with nuclear power plants. That would have to be off the back of existing capacity given nuclear’s decade-spanning construction period. Looking beyond to 2040, a further 100 GW of nuclear power worldwide could be built with the backing of data centers as offtakers – assuming this partnership goes from strength to strength.
The new data center from Ubitus will primarily support generative artificial intelligence (AI) operations, which require a large and consistent energy supply. Ubitus CEO Wesley Kuo explained that nuclear power is the most competitive option due to its reliability and cost efficiency. Ubitus is considering Kyoto, Shimane, or Kyushu as potential sites, all of which have access to nuclear power facilities. The company expects to finalize the location by early 2025, with an initial power-receiving capacity of 2-3 MWe, potentially expanding to 50 MWe.
Ubitus recently received investment from Nvidia, reflecting the growing demand for generative AI and cloud gaming in Asia. This isn’t the largest deal in its own right, but it’s part of the trend which has seen major tech companies like Amazon, Google, and Microsoft invest in nuclear power to support their data centers.
Goldman Sachs forecasts that data centers will consume over 1,000 TWh of electricity per year from 2030, an almost three-fold increase from 2023. If all that energy was to come from nuclear plants, some 135 GW of capacity would be required. Given that today’s global total sits at 393.3 GW, according to the Nuclear Energy Institute, and that the majority of these announcements talk about retired plants coming back online or new SMRs being built, we can assume that a 35% increase is feasible. And that’s only down to data centers.
Most nuclear capacity forecasts out there will become conservative overnight if they haven’t accounted for data centers giving new life to the nuclear sector.
In markets with good solar and wind resources, backed by transmission network expansions and ample energy storage, it’s not hard to imagine nuclear losing out as the power source of choice for data centers, to wind-solar-storage. But in markets like Japan forced by land availability to put its solar on rooftops and its wind power offshore, both expensive options, nuclear will have an angle.
The same applies to any market which develops a chronic insufficiency of transmission infrastructure expansion compared to the demand for renewable energy – with wind and solar needing longer transmission lines, which are then used less consistently even with energy storage co-location, compared to nuclear power.
The International Energy Agency (IEA) predicts 647 GWe of nuclear by 2050, while the International Atomic Energy Agency (IEAE) points to a staggering 950 GW. The latter may seem far-fetched given the commentary around the cost of nuclear, but is now backed by the fresh momentum coming from the tech sector. It’s the IEA’s forecast which we expect to see updated next year.