Nuclear Power and the Data Centre Renaissance

When Microsoft announced in September 2024 that it had signed a 20-year power purchase agreement with Constellation Energy to restart the Three Mile Island nuclear plant, the reaction ranged from enthusiasm to scepticism. The enthusiasm came from those who understood the power problem facing the data centre industry. The scepticism came from those who remembered why Three Mile Island was shut down in the first place. Twelve months on, the enthusiasm has proven more prescient — and the nuclear renaissance in data centre power supply is accelerating.

The underlying logic is compelling. Data centres require power that is firm — available 24 hours a day, 365 days a year, regardless of weather conditions. Solar and wind, for all their cost advantages, are intermittent. Battery storage can bridge short gaps but cannot provide the multi-day backup that a hyperscale campus requires. Natural gas provides firmness but comes with carbon emissions that are increasingly problematic for corporate sustainability commitments. Nuclear is the only large-scale technology that provides firm, carbon-free power at the density that data centres need.

The investment implications extend well beyond the power sector itself. Data centre developers who can secure long-term nuclear power agreements gain a meaningful competitive advantage — both in terms of operating costs and in terms of their ability to meet the sustainability requirements of hyperscaler tenants. This is driving a wave of investment in small modular reactors, which promise to deliver nuclear power at smaller scale and lower upfront cost than conventional plants. Companies like X-energy, Kairos Power, and TerraPower — all of which have received commitments from major technology companies — are attracting serious institutional capital.

For Asia, the nuclear-data centre nexus is particularly relevant. South Korea, Japan, and India all have active nuclear programmes and significant data centre buildout ambitions. The intersection of these two trends creates investment opportunities that are not yet well-understood by generalist investors — but that are very well-understood at Lensbridge.