Renewable energy sources could power datacenters at a lower cost than relying on nuclear generation from small modular reactors (SMRs), claims a recently revealed study.

Renewables can meet 80 percent of the constant demand from a large datacenter over the course of a year

The current bit barn construction gold rush is driven by all the hype surrounding AI development, but it is causing concern over how to provide enough power for them all, on top of growing energy demand for other uses such as electric vehicles.

Datacenter operators have been eyeing up numerous options, including tapping nuclear power, while SMRs have been getting a lot of attention as they could be made small enough to provide on-site power for a bit barn campus.

But analysis from the Centre for Net Zero (CNZ) says it would cost 43 percent less to power a 120 MW data facility with renewables and a small amount of gas-generated energy, when compared with an SMR.

It claims that a microgrid comprising offshore wind, solar, battery storage, and backed up by gas generation, would be significantly cheaper to run annually than procuring power sourced from a nuclear SMR.

A microgrid is a localized energy network that generates and distributes electricity for a specific area, and typically operates independently from the state power grid.

CNZ describes itself as an open research institute, founded by Octopus Energy Group in the UK, and claims to advise the State of California and Europe’s International Energy Agency as well as the British government.

While CNZ’s study applies to the UK sector, where energy costs are among the highest in the industrialized world, it is likely that the overall conclusion would still be valid in other countries as well.

Its analysis shows that renewables can meet 80 percent of the constant demand from a large datacenter over the course of a year. Offshore wind can provide the majority of load requirements, with gas generation backed by battery storage as a stopgap source of power representing the most cost-optimal mix.

Greater capacity in the on-site battery storage system would reduce the reliance on gas power, and this would likely happen over time as the cost of such systems is expected to come down, the report claims.

But perhaps the real kicker is that CNZ estimates that microgrids powered largely by renewables could be built in approximately five years, while operational SMRs are not expected to be widely available until sometime in the next decade.

CNZ says that it calculated the typical yearly resource cost (capex and opex) of powering a datacenter with a nuclear SMR, and modeled this using Python for Power System Analysis (PyPSA), an open source energy modeling tool, against two renewable energy scenarios. One was the wind, solar, battery, and gas mix, while the other omitted solar.

“This research demonstrates that proven renewable technologies could meet the urgent demands of the UK’s AI sector more quickly and affordably than nuclear alternatives,” claimed CNZ Director of External Affairs Izzy Woolgar.

“While nuclear SMRs may play an important role in the UK’s future energy mix, our analysis suggests renewables offer a cost-competitive, proven solution for meeting new energy demand in the short term,” she added.

Not everyone will be pleased to hear this, of course. US President Donald Trump has a famous dislike of renewable energy, previously pledging to destroy offshore wind farms, and officials in his administration are expected to play along. This is despite a US report in 2023 showing that it would be cheaper to replace American coal-fired power stations with renewables. ®