Data Centers Go Nuclear

This week, nuclear energy startup Valar Atomics raised $450 million at a $2 billion valuation. The company, which was founded in July 2023, raised a $130 million in Series A funding just six months ago. The new round was backed by Anduril founder Palmer Luckey, Palantir CTO Shyam Sankar, and Lockheed Martin board member John Donovan. Valar’s model centers on “gigasites”, clusters of small modular reactors operating together, sized to sit directly behind a hyperscaler’s fence line.

The bet on Valar reflects a larger tailwind: data center electricity consumption reached 176 terawatt-hours in 2023 and could exceed 580 terawatt-hours by 2028, accounting for up to 12% of national demand. Operators seeking grid access face interconnection wait times of around five years, and existing nuclear plants have had their output pre-sold. SMRs, such as those provided by Valar, address this directly: at 50 to 300 MW, some designs can be sized to match data center load and require only a few dozen acres.

However, the challenge will be to scale SMR energy production to meet surging demand. To date, no SMRs in the US are in commercial operation. This challenge is exacerbated by regulatory hurdles like the Nuclear Regulatory Commission, which Valar is suing for what it believes are unlawful restrictions on small-scale reactor innovation, as the NRC requires SMRs to follow the same approval process as large plants. Meanwhile, hyperscalers have signed agreements in recent months to power their data centers with traditional reactors; for example, reports this week indicate that Amazon wants to build data centers at the Calvert Cliffs nuclear plant.