OpenAI CEO Altman Says Future of AI Depends on an Energy Breakthrough

OpenAI’s CEO Sam Altman said at a forum held at the Davos conference in Switzerland that an energy breakthrough is necessary for future artificial intelligence.

It is needed, he said, because the semiconductors that process AI applications consume enormous amounts of electrical power. Altman said the power requirements for the semiconductors that run AI software applications are much greater than he expected.

It follows that the data centers that will host the computers using these chips will be larger and consume much more electricity than facilities that host traditional business transaction processing programs.

Where will the energy (electricity) come from the power these hyperscale data centers? According to the trade journal Data Center Industry News (DCD), “ Hyperscale data centers are massive business-critical facilities designed to efficiently support robust, scalable applications and are often associated with big data-producing companies such as Google, Amazon, Facebook, IBM, Apple, and Microsoft.”

DCD reports that Apple’s $2bn Mesa data center in Arizona, for instance, spans 1.3 million square feet. Google’s Council Bluffs data center covers more than two million square feet and has a demand for electrical power of over 100 MW. According to Cisco, despite representing less than 10 percent of the market, more than half of all data processed in 2020 passed through a hyperscale facility.

In looking at the market for hyperscale data centers, DCD reports that the US, Tier 1 markets include Northern Virginia; Silicon Valley; Dallas; Chicago; Phoenix; New York and Atlanta. In EMEA, you have what is known as the FLAP markets – Frankfurt, London, Amsterdam and Paris – as well as Dublin and Madrid. APAC’s Tier 1 markets include Greater Tokyo, Singapore, Sydney and Hong Kong.

DCD reports that If they can achieve strong connectivity, hyperscale companies can choose to locate in rural areas, wherever the most reliable energy supply and affordable land are.

Where and How Will the Power Come from for Data Centers?

At Davos Sam Altman told the Reuters news wire, “There’s no way to get there without an (energy)  breakthrough,” he said. “It motivates us to go invest more in fusion.”

In 2021, Altman invested $375 million in privately held U.S. nuclear fusion company Helion Energy, which has since signed a power purchase agreement to provide energy to Microsoft in future years.

While Altman’s expressed solution for an energy breakthrough cites an example in which he has a major interest, Altman also said he wished the world would embrace nuclear fission as an energy source as well.

Microsoft’s Commitment to Nuclear Fission and Fusion

Microsoft is OpenAI’s biggest financial backer having invested $13 billion in the firm and provides computing resources for AI  which is one big bet by any measure.  If it is going to realize a return on that investment, it will need unprecedented amounts of electrical power to run the data centers that will process AI software applications.

It follows that it will likely replicate its power purchase agreement with Constellation Energy to draw power from the utility’s nuclear reactors.

Looking at the future, the demand for electrical power to support data centers that host artificial intelligence software, as well as other business applications, may result in partnerships involving Microsoft and developers of small modular reactors (SMRs). The SMRs, which come in sizes of from 50-to-300 MWe, can offer the advantage of a secure, captive source of reliable conditioned power for the firm’s data centers.

By positioning itself as a customer of power from SMRs, and not as a developer of nuclear reactors, Microsoft, and other major IT platforms like Amazon and Google, may become initiators of new demand for SMRs focused on a specific vertical market, e.g. power for data centers, beyond general demand for electricity.

Microsoft recently published a 17-page white paper on its approach to nuclear energy – fission and fusion. The white paper was completed last month about the same time the firm hired its first two senior level managers to run the firm’s engagement with and use of nuclear energy.

In December Microsoft hired two key managers to work on the use of nuclear energy to power the firm’s global data centers. They are Archie Manoharan as Director of Nuclear Technologies, and Erin Henderson as Director of Nuclear Development Acceleration. Both managers come to their respective positions with significant nuclear energy industry experience.

Microsoft stated in the white paper it is committing to using digital technologies, including artificial intelligence, to unravel the complexity and, presumably the cost, of regulatory processes.

In the white paper the firm writes, “Digital technology can accelerate innovation and integration. We are using our expertise in AI, cloud, and digital platforms to help our customers and partners in the nuclear and fusion industry streamline processes, optimize performance, and enhance safety and security.”

Separately, Bill Gates is an investor in TerraPower which is planning to build a first of a kind advanced sodium cooled 345 MWe nuclear reactor at the site of a former coal fired power plant in Kemmerer, WY. Pacific Corp, which owns the plant, has an MOU with TerraPower to build additional units to replace five other coal fired plants.

TerraPower’s effort is funded in part under a cost sharing grant of federal funds as part of the Department of Energy’s Advanced Reactor Development Program.

It follows that TerraPower’s 345 Mwe advanced SMR could be one of the offerings that supply electricity to Microsoft data centers funded, in part, by its $13 billion investment in OpenAI.

As a parallel effort to plans by TerraPower to replace a coal fired power plant, Microsoft has also entered into a strategic partnership with Terra-Praxis to repower coal-fired power plants.

In September 2022 Terra Praxis and Microsoft signed an agreement to deliver a digital solution to tackle a significant decarbonization challenge – repurposing over 2,400 coal-fired power plants worldwide to run on carbon-free energy. Terra Praxis will combine its deep expertise in energy with Microsoft to build and deploy a set of tools to automate the design and regulatory approval needed to decarbonize coal facilities with nuclear power, helping transition one of the world’s largest sources of carbon to zero emissions.

Siting Options for Data Centers and SMRs

It follows that given the multi-year delays in building new long distance electricity transmission lines, that data centers seeking to rely on nuclear power should consider the following sequences of priorities for location and development.

First – Locate adjacent to an existing nuclear power plant anchoring the business relationship on a power purchase agreement. Microsoft has already done this with Constellation and with Ontario Power Generation. These agreements have the advantage of accessing the relevant reactor’s grid connection regardless of whether power is coming from the reactor or other sources, e.g., solar, wind, or gas, on the grid.

Second – Locate adjacent to a small modular reactor built on or near the site of an existing nuclear reactor. From the nuclear utility’s perspective, the SMR is a roughly equivalent choice relative to uprating the power of the reactor. Plus, if demand for electricity grows, additional SMRs can be built insuring reliable conditioned power as the data center customer based grows over time.

Third – Locate adjacent to a greenfield SMR that has a locked in grid connection. A proposed greenfield combined SMR and hydrogen production project in Southwest Virginia is also planning to host data centers needing power from the project.

A Modest Proposal for a Joint Forum for Nuclear and Data Center Managers and their Customers

Getting power from nuclear reactors, large or small, is a relatively new idea for data center managers. It is important for the nuclear industry to emphasize that the path for data centers to tap SMRs, or other types of nuclear power plants, is through power purchase agreements thus avoiding the inherent risks of building them.

A forum composed of industry leaders from the data center and nuclear worlds, along with data center customers, would help facilitate the development of business arrangements whereby the evolving rapid growth in the size of data centers and their demand for electricity could be satisfied by nuclear energy.

The US Department of Energy’s Idaho National Laboratory could host such a forum with an annual conference, joint working groups, and publication of conference proceedings and technical white papers.

While the idea is entirely hypothetical on my part, and is in no way intended to presume to speak on behalf of any other organization, I think it has potential given the interest in partnerships by data centers and their customers in using nuclear power to meet their demand for electricity.

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Prior coverage on this blog:  Some Quick Thoughts on SMRs for Data Centers

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