Rising energy demand from hyperscale data centres is becoming a major barrier to growth, as AI drives ever larger facilities and power-hungry computing. For operators seeking consistent, local and low-carbon energy, new nuclear options are gaining attention.

Small modular reactors, or SMRs, are compact nuclear plants typically below 300 MW. Their smaller size allows more factory manufacturing, lowering construction risk and enabling siting closer to industrial users such as data centres. Supporters argue this could deliver firm, low-carbon power where grids are constrained.

Designs fall into two broad groups. Advanced concepts such as molten salt or liquid metal reactors promise higher efficiency but have limited operating history. Others adapt proven light water reactor designs, with companies such as Rolls-Royce SMR and Westinghouse arguing that miniaturisation is already well understood from naval reactors.

IDTechEx notes that SMRs must still overcome regulatory hurdles, public concern and cost competition from renewables and storage. Yet recent backing from technology firms signals growing interest in nuclear-powered data centres as part of decarbonisation strategies.

Fusion is also being explored as a longer-term option. Unlike fission, fusion produces no long-lived radioactive waste and could offer steady, low-carbon power. Microsoft signed a 50 MW power purchase agreement with Helion in 2023, while Google agreed a 200 MW deal with Commonwealth Fusion Systems in 2025, with supply expected in the early 2030s.

IDTechEx concludes that nuclear, whether advanced fission or future fusion, could support emissions cuts where round-the-clock power is essential. However, both will compete with rapidly improving renewables, grid upgrades and energy storage as data centre operators pursue net zero targets.

The outcome may shape how the digital economy grows without locking in new sources of carbon pollution.