The exponential growth of data center energy demand, particularly driven by advancements in Artificial Intelligence (Al), has emerged as one of the most pressing challenges for energy infrastructure globally. Between 2023 and 2030, global data center power consumption is projected to increase by 160%, pushing data centers to account for up to 8% of total U.S. electricity demand. This rise is primarily driven by the increasing adoption of Al servers, which consume significantly more power than traditional systems. For instance, a single Al server of a major manufacturer of Al Graphic Processing Units (GPU) can consume up to 10.2 kW at peak load, representing a 15-fold increase in computational speed but with higher power requirements per server.
However, existing grid infrastructure is increasingly constrained, particularly in regions with concentrated data center activity, such as Northern Virginia’s “Data Center Alley”[41. Transmission bottlenecks, aging infrastructure, and long timelines for grid upgrades present significant challenges for meeting this explosive demand. Microgrids, powered by Distributed Energy Resources (DERs), offer a promising solution by reducing dependency on centralized grids, integrating generation from multiple fuels and storage, and providing load flexibility. Further, a microgrid solution improves power quality, reliability and energy security.
While Small Modular Reactors (SMRs) are not yet commercially available, a two-stage, multi-year approach can provide an effective pathway from available DER to SMR. First, current energy needs are met through existing Distributed Energy Resources (DERs)-such as renewable generation, battery systems, and Combined Heat and Power (CHP). Second, as SMRs become viable, they can be seamlessly integrated to provide scalable, low-carbon baseload power. This approach addresses immediate challenges while future-proofing data centers for sustained growth
In this paper, we demonstrate the benefits of this multi-year approach through real-world data center examples in Santa Clara, California and Ashburn, Virginia. The same real data center profile is used in each example to compare the benefit of DERs and SMRs in very different regions. Using innovative Mixed Integer Linearized Programming (MILP) techniques through Xendee’s advanced Microgrid modeling platform, we optimize energy investments, reduce OPEX costs by 60-80%, and still significantly reduce CO2 emissions in each case.
Therefore, the innovative application of multi-year optimization not only aligns with decarbonization goals but also ensures financial viability by reducing LCOE and enhancing investment efficiency, ultimately avoiding stranded grid infrastructure investments as demand grows. This approach represents a paradigm shift in microgrid planning, offering a flexible, scalable blueprint for sustainable and resilient data center energy infrastructure tailored to both high-cost and low-cost regions.
