Data Centers, Nukes, And The Grid

AI is hungry for power, but the grid’s most precious resource isn’t just generation—it’s time. We dig into a headline‑grabbing plan to build a 1,500‑megawatt nuclear‑powered data campus in South Texas and unpack why the near‑term reality starts with on‑site gas, not fission. From regulatory approvals and factory build‑outs to fuel and financing, modular nuclear still has miles to go. Meanwhile, data center builders face a thicket of interconnection queues, uneven utility processes, and hardware lead times that stretch to 2030.

We trace the practical playbook emerging across the industry: bridge with co‑located turbines or fuel cells, pursue grid interconnection in parallel, and design for redundancy because machines fail and maintenance windows are inevitable. Even markets famous for speed are hitting constraints. Transmission megaprojects take decades, demand requests are swallowing remaining capacity, and rate pressures are pulling energy costs into the political spotlight. Against that backdrop, the smartest lever may be operational, not infrastructural.

Here’s the pivot: flexible data center loads. With better workload orchestration, curtailment commitments, and virtual power plant contracts, large campuses can shed up to 25% for multi‑hour windows, buy capacity from aggregators, or island temporarily using their own generators. Grid operators are responding in kind, offering accelerated interconnection paths for customers willing to flex, while policy signals in places like Texas clarify that curtailment is part of the deal. The payoff is systemwide—higher load factors, more megawatt hours across the same wires, and a faster route to growth than waiting for the next 765‑kV line.

If you care about how AI, cloud infrastructure, and energy policy collide, this conversation connects the dots between nuclear timelines, gas‑first strategies, interconnection reform, and the rise of demand flexibility and VPPs. Subscribe, share with a colleague who builds data infrastructure, and leave a review with your take on the best path: build more generation, or bend the load?

Support the show

🎙️ About Energy Future: Powering Tomorrow’s Cleaner World

Hosted by Peter Kelly-Detwiler, Energy Future explores the trends, technologies, and policies driving the global clean-energy transition — from the U.S. grid and renewable markets to advanced nuclear, fusion, and EV innovation.

💡 Stay Connected
Subscribe wherever you listen — including Spotify, Apple Podcasts, Amazon Music, and YouTube.

🌎 Learn More
Visit peterkellydetwiler.com
for weekly market insights, in-depth articles, and energy analysis.

Episode Transcript

SPEAKER_00 (00:04):
Hi, I'm going to try something new with my weekly
video.
Rather than providing you with alight touch on a number of
stories, I will instead dig in alittle deeper on a particular
topic, providing you with a bitmore context and analysis.
I'll be curious to see what youthink and we'll see where that
takes us.
So for the first one, last weekAI infrastructure provider
Crusoe and modular nuclearcompany Blue Energy announced a

(00:27):
new partnership focused ondeveloping and operating a 1,500
megawatt nuclear-powered datacenter campus at the Port of
Victoria in South Texas.
As observers in the space know,it'll be a while before we see
the first modular nukescommercialized, as there are
still numerous hurdles toovercome.
First, designs must be approvedand tested, then the factories

(00:48):
that make these modularfacilities must be built, and
they'll have to achieveeconomies of scale, producing
significant volumes to drivemarginal unit costs down.
That in turn implies that of thedozen plus companies in the
space right now, most will haveto fail.
Then, of course, there are thefinancing challenges, fuel
supply issues, associatedsecurity concerns, and the NIMBY

(01:10):
issue.
If people are fighting wind,solar, and storage in their
backyards, just imagine how theywill respond in many parts of
this country to nuclear.
But let's take the leap of faithand assume that Crusoe and Blue
Energy can get to yes on this.
What will they do to power thedata facilities in the interim?
Well, they'll look to on-sitegas generation, of course.
And the two companies positiontheir approach as the world's

(01:33):
first gas to nuclear conversion,with the transition to nuclear
generation anticipated by 2031.
The concept is an interestingderivation of another approach
that's increasingly beingembraced as it's becoming clear
that A, many data centers arechasing the same megawatts of
grid power, and B, that processof grid interconnection is

(01:54):
taking a long time.
Today, the interconnectionprocess is also different across
the country and may vary widelyfrom one utility to the next.
I had a recent conversation withan unnamed developer, and he
commented that from what he seesout there in the landscape,
there is no one size fits allapproach, and some utilities are
remarkably ill-prepared for therequests they are fielding.

(02:16):
This individual was thus lookingforward to seeing the ultimate
outcome of the October 23rdletter from Secretary of Energy
Chris Wright to the FederalEnergy Regulatory Commission,
directing the FERC to develop aninterconnection rulemaking for
data centers in large loads.
A standardized process, if it'sa reasonable one, that generally
protects all actors, includingratepayers, couldn't hurt,

(02:38):
though it's a big lift.
Faced with these difficultiesand the enormous value to data
centers of quickly accessingelectrons, other developers are
also turning to bridgingstrategies, but rather than
looking to nukes as their endgame, they're eyeing the idea of
co-located fuel cells orturbines to spin up their
facilities even as they pursuelonger-term interconnection to

(03:00):
the power grid.
That begs the question, why notjust skip the grid entirely and
go with on-site co-located powerfor the long run?
Well, the answer to that is theplants break down on occasion.
And when those generators don'tfail, they still need to go out
for maintenance.
GE Vernova, for example, notesthat its turbines typically
require maintenance every one tothree years, depending upon how

(03:22):
they're operated.
So if you're a data center owneror operator, what do you do when
your generation plant is down?
If you're not grid connected,you do nothing unless you have
other backup generation.
Data facilities not tied to thegrid may have to carry
considerable reserve margins oftheir own.
Take, for example, themeta-subsidiary that received
approval in June for a 200megawatt data center in Ohio.

(03:46):
It's not being supported by asingle generator, but rather by
a fleet of about 30 machines,including smaller combustion
turbines and quick startreciprocating engines.
The total capacity is about 320megawatts of generation,
presumably to address thatoutage and maintenance issue.
The other challenge for directsupply is generator lead times.

(04:07):
If you haven't orderedgenerators yet, get in line.
And you can expect to both waitand pay, as the turbine
manufacturers now requiredeposits as far out as 2030.
So for many, direct supply won'tbe easy.
Thus, most developers in the endwill likely try to connect to
the grid for years to come.
That process will start withthose already connected or well

(04:28):
into the interconnection queues,but those applicants will
rapidly fill up the existingtransmission capabilities of
today's grid.
Then we'll hit a roadblock,since new transmission projects
take longer than designing a newrocket and getting it into
space.
Take, for example, the 3.5gigawatt Sunzia project from New
Mexico to Arizona.
That endeavor took 17 years topermit and complete, with review

(04:52):
by 10 federal agencies.
The Green Belt Express from Iowato Indiana, Illinois, that one
that just lost its federal loanguarantee, that's been in the
works for 15 years.
By contrast, SpaceX started ondesign of its Falcon 1 rocket
right after its founding in2002, with the first launch
attempt in 2006 and successfullyreaching orbit in 2008.

(05:16):
So half the time it takes to getthese transmission projects
built.
Texas can build faster thanmost, since most of its lines
can and will be built withoutcrossing state jurisdictions.
But even in Texas, there arelimits.
That grid peaked out at 85,500megawatts of demand in the
summer of 2023, but it now hasover 200,000 megawatts of large

(05:38):
loads, mostly data centers,seeking interconnection.
The grid is eyeing atransmission upgrade, including
nearly 2,500 miles of 765 KVIvoltage lines, the biggest lines
currently employed in the U.S.,at a cost of over$32 billion.
Those lines are intended to meeta 2030 demand forecast of

(05:58):
150,000 megawatts, so perhaps65,000 megawatts above recent
peaks.
If large loads need much newcapacity beyond that threshold,
they won't get it from the gridright away if they expect to
have their demand met duringsystem peaks.
And that transmission projectwon't be built out for years.
But here's where today'sinefficient grid works in

(06:20):
everybody's favor.
Right now, the grid operates atroughly a 53% load factor, which
means it's overbuilt to servesystem peak plus reserve
margins, and it's highlyunderutilized.
But what if new data loads couldexhibit more flexibility and
reduce consumption during thoseperiods of peak demand?
A Duke University NicholasInstitute study suggests that

(06:42):
with flexibility, one couldinterconnect tens of thousands
of additional megawatts.
This could be done by changingthe way data centers operate.
And Chipmaker NVIDIA justannounced that with software
vendor Emerald AI, its datacenters may be able to
demonstrate more flexibilitythan has previously been
supposed.
A new project going intoVirginia called Aurora will be

(07:05):
programmed to do just that.
And tests have shown the abilityto reduce demand by up to 25%
for as long as three hours.
Or data center companies couldbring their own generation.
So if the grid operator calls onthe data center, they can
disconnect from the grid andtemporarily self-generate.
Southwest PowerPool is planningto accelerate its

(07:25):
interconnection process to just90 days if data centers can
commit to being curtailed.
And Texas Senate Bill 6 alsolooks at curtailment, explicitly
telling data centers that ERCOThas the right to use a kill
switch that will employ if itneeds to.
And those data centers will haveto accept that fact if they want
to be interconnected.

(07:45):
Or perhaps data centers couldbuy capacity from somebody else
that can provide it morecost-effectively.
That's what DR provider Voltasis offering, a virtual power
plant arbitrage opportunity.
If a data center needs 500megawatts of capacity, they
could buy that from somebodyelse who could shed that load
when it's required.
Other virtual power plantdevelopers are nurturing the

(08:07):
same concept.
So flexibility, whether directlyin the data center load or
bought from other customers, canhelp.
It can push down the peaks andpush up the shoulders.
That will increase load factorsso we can flow more megawatt
hours across the sameinfrastructure.
And with transmissiondistribution costs increasing
even faster in recent years thangeneration costs, this approach

(08:30):
seems logical, necessary, andurgent, especially since utility
rates are increasingly in thecrosshairs of the political
conversation.
Bridging strategies and nukesmay help some actors such as
Crusoe, but for many others,flexible load may finally have
its day in the sun.