Demand for data centers is surging – accelerated by the AI boom. Grand View Research estimates annual data center growth rates of 10.9 percent between 2023 and 2030.
That’s great for the data center industry, but it also presents a challenge. The industry can’t grow to meet demand without power – massive amounts of it.
However, right now, skyrocketing power consumption is putting a huge strain on the US power grid and if power is limited, then data center growth will be limited as well. A massive increase in supply is needed. According to S&P Global, data centers will need to consume 33GW of electricity by 2030.
Complicating the challenge still more is that not just any power will do.
If demand is met with power generated by an upsurge in the use of fossil fuels, as The New York Times reported in March, then the data center industry’s climate goals - and also the world’s - are at risk. So, what’s the solution?
An “all-hands” solution is needed
What’s clear is that data centers cannot meet the challenge themselves, rather it will take an all-hands approach. In particular, it will take companies like mine, Nucor, that have faced and overcome the same clean energy challenges. As a result of that experience, we envision and can help implement a shared approach that will drive data center growth and help the industry meet both growing demand and its environmental goals.
The question is, as a steel company, how can we support data centers’ need for energy?
It might help to understand our background. We came to the data center industry as a supplier of steel for structures and critical components such as server racks. But what we provide is not just any steel but “green steel.”
Nucor supplys circular steel, produced in low-carbon-emissions electric arc furnaces using recycled scrap as the primary feedstock, rather than traditional, carbon-intensive blast furnaces that rely primarily on extracted raw materials like iron ore to make steel.
Steel is of course a major component of a data center’s carbon footprint, and the use of sustainable circular steel can have a significant positive impact on emissions and on a data center’s carbon footprint.
But over and above that, because steel manufacturing is an energy-intensive process, our core work on circular steel has accelerated our expertise and capability to identify and source renewable and carbon-free energy technologies that can be deployed in other settings.
Here is what we have learned along the way, and how those lessons can help.
Multiple renewable and carbon-free energy sources must be brought to bear
We know from our own experience that both the quantity and the quality of power matters. Each data center requires high-capacity power that is steady and reliable, 24/7, with high uptime.
No single zero-emissions energy source can currently meet the need. Each has advantages and disadvantages. Solar power can be lowest cost – but is constrained by geography and season. Wind power is similarly constrained, but in other ways – wind availability is often highest in low-sun locations, times of day, and seasons of the year. They have the potential to be complementary but current capacity is insufficient.
This argues for an “all of the above” energy strategy that includes both wind and solar as well as other options.
At Nucor, we have increasingly turned to “first-of-a-kind” power sources including advanced small-scale nuclear energy, geothermal technology, clean hydrogen, and long-duration energy storage (chemical, thermal, mechanical, or electrochemical).
Many of these – in particular small-scale nuclear and “green molecules” for energy storage – have the added advantage that they can be implemented “behind the meter,” directly on the data center site, eliminating transmission costs that today effectively limit the geography available for data center expansion.
Creating a pathway toward carbon-free energy for the data center industry
Our goal is to help bring those advanced renewables to bear on behalf of the data center industry.
We and our partners will overcome those barriers in several ways; aggregating demand so that projects are funded and commercial power users like data centers have more energy-buying options.
We can also create commercial frameworks – including offtake agreements that guarantee carbon-free energy purchases, stakeholder advocacy, and the development of new tariff structures – that will make these technologies more economically viable and more widespread.
Meeting the demand for clean power, in collaboration with the data center industry, is the essential first step toward realizing the potential of AI, driving data center expansion, and meeting climate goals.