When the Labour Party came to power in 2024, Keir Starmer immediately relaxed the UK’s planning laws, thus opening the gates for a data centre construction boom. The move wasn’t just a way to attract international investment in a shaky economy – it was part of a larger strategy to make the UK a leader in AI technology.
AI systems are fuelled by data, so as these systems proliferate, more data centres will be needed to support them. But the challenge then becomes fuelling those data centres, which require significant energy resources to operate.
In the UK, data centres already use 2% of total power supplies. By the end of 2025, data centres worldwide could guzzle as much as 23 gigawatts (GW) of power – or twice the amount consumed by the Netherlands. Lacking suitable infrastructure to support their soaring resource demands, data centres are competing with population centres for power (and water) supplies.
Cost too is threatening future data centre operations. Wholesale electricity in the UK is already expensive compared with peer countries in the EU. And, although energy prices worldwide have fallen from peaks in 2021-22, they are still higher than in pre-Covid years for most developed economies. As power demands rise alongside AI use, hyperscalers are feeling the pressure on their bottom lines. To stay competitive, companies such as Microsoft and Google are slashing costs and boosting revenue. To avoid hypocrisy, they are dropping some long-standing commitments to net zero and sustainability.
Rather than reducing their energy consumption, the world’s largest tech companies are seeking alternative energy sources to power their data sources. The use of conventional power sources is undesirable for many reasons. And clean-tech solutions are simply unable to produce enough power for the world’s data centres.
Nuclear energy therefore is drawing interest from the public and private sectors. Matt Garman, chief executive at AWS, recently called on the UK to accelerate building new nuclear power facilities, for instance. And key to making this atomic dream a reality is a long-theorised technology that may finally be ready for production: small modular reactors (SMRs).
Can SMRs solve the data centre energy crisis?
SMRs are designed to generate about 300 electric megawatts (MWe) per unit – less than a third of what’s generated by traditional nuclear power stations. But, crucially, SMRs take up far less space than traditional plants, which is partly why the nuclear energy industry is buzzing with excitement for their potential. Merchant shipping and aviation firms, as well as businesses in heavy industry, have also expressed interest in the technology.
“Data centres are probably the best market signal there’s been in a long time for these technologies,” says Ross Peel, research fellow for nuclear safety and risk at King’s College London. “You’ve got Google and Amazon saying they’re ready to put the money in – and they have the resources to do so.”
In late 2024, Peel attended the first major SMR conference hosted by the International Atomic Energy Agency. While there, he noticed that the direction of influence in the industry had shifted. While it was once providers pushing the technology on a disinterested public, consumers and end-users were driving the conversations, as though the world had woken up to the possibilities for cheap nuclear energy.
Nuclear regulation in the UK
The UK government is positioning itself as an early SMR adopter. As part of a major policy announcement in 2024, Westminster committed to exploring the use of nuclear power to fuel data centres. And SMRs will be key to enabling growth in energy-hungry sectors such as AI, according to a spokesperson for the Department of Energy Security and Net Zero, who, speaking to the BBC, said the government was “shaking up the planning rules to make it easier to build nuclear power stations across the country”.
Great British Nuclear, the state-owned nuclear energy company, is seeking to deploy SMRs and is in the process of selecting a vendor, with GE-Hitachi, Holtec, Rolls-Royce SMR and Westinghouse all frontrunners.
Unlike traditional mega-site reactors, SMRs would be widely distributed and could even be constructed near towns or cities. Plus, as part of his war on nimbyism, the prime minister relaxed planning restrictions for nuclear sites, meaning they could theoretically be situated anywhere in the UK. Locals in the area of a reactor might even benefit from discounts on their energy bills, the government suggested.
This distributed model will be important for SMRs to succeed, with some providers suggesting facilities are co-located with data centres or other critical national infrastructure – like clusters of heavy industry that benefit from clean energy on their doorstep.
In the UK, the regulation of new nuclear projects is shared across multiple departments. The Environment Agency, the Department for Environment, Food and Rural Affairs (Defra) and the Planning Inspectorate are jointly responsible for the planning and regulatory justification of new sites. The Office for Nuclear Regulation (ONR), meanwhile, helps to assess the safety and technical standards of nuclear providers. Before developers can break ground, they must convince the ONR that the site structure, environmental protection and reactor design, for instance, are up to code.
ONR seeking streamlined regulation
Although the ONR is not directly responsible for setting policy, Jane Bowie, its director of new nuclear reactors, says the organisation has been working for years to streamline regulatory processes. “We recognise we’ve got a role to play in supporting the government’s ambitions around growth, energy and net zero,” she adds.
Now that large sites such as Hinkley Point C have passed the approval stage, the regulator has turned its focus to SMRs. The ONR maintains an “open-access policy”, meaning developers can approach it for technical support or to collaborate on regulatory requirements. The organisation also consults with regulators in the US, Canada and the EU to determine best practices for SMRs. “There’s never been a new nuclear project that’s been delayed by regulatory approvals,” Bowie says. “So we’re doing what we can.”
If you talk to the hyperscalers, you’ll find out that they needed the electricity yesterday
The UK or EU have yet to fully approve any SMR designs. Meanwhile, only one SMR design has received regulatory approval in North America – a 50MW reactor developed by NuScale Power, which claims to have spent $500m (£369m) and more than 2 million hours of labour preparing its design-certification application. “That’s a tremendous amount of money for any startup,” notes Chris Gadomski, chief nuclear analyst at BloombergNEF.
But regulators may soon find themselves extremely busy if approvals processes are streamlined and SMRs live up to industry expectations. In the US, for example, licensing costs for advanced reactors could fall by as much as 55% in October, with the nuclear regulator under pressure to enable energy innovation.
“Imagine the starting gates in a horse race,” Gadomski says. “All these providers are lined up and boom – when the rate goes down, if it’s approved, you will have an onslaught of advanced-reactor companies moving through the licensing process expeditiously.”
Waste not, want not
There’s good reason why regulatory approvals for nuclear projects take so long. After all, when nuclear power goes wrong the world takes notice. Any new nuclear facility must go through a meticulous design-approval process before it is built. Then, once it is operational, the site must comply with strict maintenance and security rules.
Crucially, any waste must be disposed of appropriately. It cannot be simply discarded or destroyed; it must be stored until it is no longer radioactive. Some types of waste, such as plutonium-239, have a half-life of 24,000 years, so disposing of it effectively requires creativity and cost.
One solution is burying nuclear waste far beneath the Earth’s surface. In the US state of New Mexico, for instance, authorities store nuclear waste from weapons research and production in natural salt deposits more than 600 metres underground. A similar, larger waste repository was proposed at a site in Nevada, in Yucca Mountain, about 90 miles from Las Vegas, but was scrapped.
Who will be responsible for managing the waste?
Waste storage will likely become more urgent if nascent nuclear technologies gain regulatory approval. Not only would more industries rely on nuclear power to fuel their operations, but SMRs might actually produce more waste than conventional nuclear power plants, according to research by Stanford University and the University of British Columbia.
“One should ask who will own the SMRs that might be constructed to power data centres,” says Lindsay Krall, a geochemist and lead author of the research. “And will those owners be prepared to manage and dispose of the nuclear waste they will produce?”
Authorities must consider these questions during the technology selection process, she adds, long before deploying any SMRs. Designs with more technically and economically feasible waste streams should be prioritised.
We can keep researching, but until we have a site it’s all just academic
“The biggest issue is who will be responsible for managing and disposing of the SMR waste,” Krall says. When the US legislature defunded the Yucca Mountain project in 2009, for instance, a stalemate ensued over who was responsible for disposing of the waste intended for the site. The US, Krall adds, currently lacks sufficient storage capacity for its nuclear waste.
The UK has both the capability and capacity to store nuclear waste, according to Peel. But finding acceptable sites to host that waste has been challenging.
“The main issues are political,” he says, adding that “getting a community on board who are willing to host a nuclear-waste repository” has been especially challenging. East Lindsey District Council expressed interest in allowing nuclear waste to be buried in the Lincolnshire countryside but withdrew from talks in April.
“Until you get a site, there’s not much we can do,” Peel says. “We can keep researching materials that will hold the waste in the ground for hundreds of thousands of years, but until we have a site it’s all just academic.”
Tech and energy sectors: will there be a culture clash?
The words ‘streamlined nuclear regulation’ may raise some eyebrows. Nuclear authorities are not known for their laissez-faire approach. For obvious reasons, the industry pays great attention to safety and security. While these are still priorities for nuclear regulators, the pressure to get development off the ground is mounting.
Signs of a culture clash, however, between tech providers and the nuclear industry, are starting to show. Peel explains that regulators want to be involved in the design of new nuclear technologies. And they want operators to develop reactors carefully and slowly.
“A lot of the developers are saying, ‘That’s not going to work for us’,” Peel says. “They’re trying to operate a lean, startup, fail-fast model, which is not the way the nuclear industry has worked.”
But fail-fast attitudes are being adopted by policymakers in certain countries, which Peel did not name, and developers are pushing for more freedom in others. “Developers are saying that they can’t sit around for 15 to 20 years waiting for regulations and development to happen in parallel,” he says. “‘We need the benefits of nuclear energy now, because we’re facing climate change now’.”
While Peel understands this argument from the perspective of a startup, he emphasises that a fail-fast approach won’t work in the nuclear industry. “You can’t have your products just fail,” he quips.
Nuclear power and data centres: a long-term outlook
Data centre operators, seeking to shore up their energy reserves quickly, are also pushing for faster regulatory approvals. But even if they get their wish, their push for nuclear power may be too late to address the first wave of their capacity needs.
“Any notable nuclear contribution to the grid is going to be after 2030. If you talk to the hyperscalers, you’ll find out that they needed the electricity yesterday,” Gadomski says. “There’s a lot of hysteria in the data centre world about tremendous increases for electrical demand and they’re fumbling all over the place to try to find out where the power is going to come from.”
So perceived energy scarcity might be the driving the force behind nuclear-energy advocacy, but whether all that power will be needed in the first place is actually uncertain. Relatively low-power LLMs are being produced by AI disruptors such as Deepseek, and the AI developers will no doubt continue to innovate for energy efficiency. But many analysts say such innovations will not drastically alter the industry’s energy demands.
Patrick Smith is the field chief technology offer at Pure Storage, a hybrid-cloud integrator. He believes that energy requirements in the data centre sector will not be solved by energy-efficient LLMs. “Efficiency and GPU performance is improving with every generation. But the paradox is, as systems become more efficient, people just do more with them,” he explains. “We haven’t hit the ceiling on AI demand, so even with efficiency gains, energy consumption is continuing to rise.”
Smith adds that new data centres are being developed and operationalised quickly – sometimes in less than three years. “Realistically, SMRs won’t be available fast enough to solve the near-term power crunch, particularly in markets such as the UK, where AI growth is outpacing infrastructure readiness,” he says. “That means firms will continue to rely on renewables and, at times, fossil fuels to fill the gaps for the foreseeable future.”
Securing physical infrastructure
From Threads to Chernobyl, it’s not difficult to find stories, fictional or real, about nuclear catastrophes that devastate populations and the environment. Given the risks associated with nuclear power, developers are bound by strict security requirements, which many small SMR firms may struggle to meet. Some providers, says Peel, envision their facilities as largely autonomous sites, which are connected to the internet and can operate with minimal human oversight.
“You hear from developers who are very keen to have autonomous reactors without any on-site staffing – either operators or security personnel – and to effectively drive the entire thing by remote control from a centralised operations room,” he explains.
Every time a nuclear disaster happens, it’s in a way nobody foresaw happening
“I liken the risk to the second Die Hard film, where they take over the airport by connecting to the cables. If somebody can position themselves between the reactor and the operators, they could potentially have a lot of influence over it.”
Conventional reactors used for non-military purposes are usually policed by private security forces. In the UK, this responsibility falls to the Civil Nuclear Constabulary. The traditional mega-sites are typically fenced off with high levels of perimeter security and armed guards.
Gadomski asks: “How large should the security force be for a 300MW reactor as opposed to a 1,000MW reactor?”
Providers hope to avoid hiring massive security forces by clustering their sites around existing plants. But part of the appeal of SMRs is that they can be widely distributed. And, Gadomski adds, there are no existing facilities in many remote locations where SMRs might be used, such as northern Canada or the Permian Basin. “The size of your physical security force becomes a pretty important issue,” he says. Perhaps one solution is to situate new nuclear reactors on existing military bases, where such a security perimeter already exists. “You have all of this military staff out there doing nothing anyway,” says Gadomski. “So they might as well shoot people who come too close to the reactor.”
The cybersecurity challenge
Cyber attacks too are a risk to nuclear infrastructure, and Bowie says the ONR considers cybersecurity when assessing any new rector designs. Nuclear sites have historically run air-gapped IT systems, where data can only flow in one direction. Given that power infrastructure has proved a tempting target for state-sponsored attackers and other cybercriminals, nuclear regulators are busily crafting new digital security standards for SMR deployments.
Providers are attempting to mitigate cyber risks in the design of their reactors by, for instance, developing materials designed to prevent reactors from reaching meltdown temperatures. Their hope is that reactors can be designed to avoid a major catastrophe even if an intruder breaks through the cyber defences.
“The idea is, a cyber attacker might tamper with the data so that the asset no longer runs, but at least they won’t be able to cause a major radiological release with public-health consequences,” Peel says.
He is not convinced, however, that such innovations will solve the security problem. “Every nuclear disaster – Fukushima or Chernobyl or Three Mile Island – happened in a way that nobody foresaw,” he says. “It’s not the accident you’ve planned for that gets you, it’s the one that no one ever thought about or realised could occur.”
So while the promise of sustainable energy might motivate government and industry to develop and enable new nuclear technologies such as SMRs, it will be many years until these reactors are widely used, at least in Europe and North America. For now, SMR developers are still facing regulatory hurdles, logistical problems and security questions, not to mention a general resistance to nuclear energy among the public. The road to a nuclear-powered future, it seems, will be long.
When the Labour Party came to power in 2024, Keir Starmer immediately relaxed the UK's planning laws, thus opening the gates for a data centre construction boom. The move wasn't just a way to attract international investment in a shaky economy – it was part of a larger strategy to make the UK a leader in AI technology.
AI systems are fuelled by data, so as these systems proliferate, more data centres will be needed to support them. But the challenge then becomes fuelling those data centres, which require significant energy resources to operate.
In the UK, data centres already use 2% of total power supplies. By the end of 2025, data centres worldwide could guzzle as much as 23 gigawatts (GW) of power – or twice the amount consumed by the Netherlands. Lacking suitable infrastructure to support their soaring resource demands, data centres are competing with population centres for power (and water) supplies.
