Nuclear power for datacenters? Why small reactors could be the next big thing in Brazil

On February 21, Brazilian nuclear energy association Abdan and datacenter association ABDC signed an MOU with a view to developing activities jointly and exploring energy supply partnerships in the sector.

The agreement is aimed at the long term, since the technologies for small modular reactors (SMRs) to supply data processing services are not yet available in the country – and Brazil still has a considerable surplus of low-cost hydro, solar and wind energy.

In this interview, Abdan president Celso Cunha shares his views on the use of nuclear power in the data industry and discusses the most pressing issues for the local industry, including the stalemate regarding the Angra 3 plant.

BNamericas: What are your expectations after signing the MOU with ABDC?

Cunha: The MOU is an initial agreement for exchanging information and formalizing a partnership. Now, we're moving forward with a specific work plan.

Our goal is to start actions in parliament, focusing on laws and regulations related to our joint interest, and also to make financing viable with organizations like Finep, not just for AI, but also to support the development of datacenters.

We have synergy. They need energy, and we need to sell. It's a win-win.

Datacenters are a sector increasingly characterized by the need for nuclear energy. The world is recognizing this. It's a business decision that several countries are making and it will happen here, sooner or later. Everything in its time. But we have a clear path ahead.

BNamericas: Nuclear energy may be attractive for datacenters because it's a steady, stable source and requires less space, among other benefits. But we've seen this technology proliferate in markets where there isn't an abundance of clean energy sources, as there is in Brazil, or where the power grid is more saturated. Does it still make sense to invest in nuclear power supply in Brazil?

Cunha: Renewables won't compete with this sector, but they're not a panacea either. Generally, they're used in places where you don't have a reliable transmission line.

Moreover, there's not enough base-load energy to offset the intermittency of renewables. In Brazil, 40% of our hydropower plants are over 40 years old. There's a huge water risk, and water use is intense.

This renewable system can't guarantee 100% reliability for a sector like datacenters. This is a strategic sector; we can't afford any hiccups in supply.

The new attempts to stabilize things, like using hydrogen, batteries, etc., are very expensive. They aren't feasible. Imagine developing and installing batteries to manage a gigawatt of energy fluctuations. There's no way; there isn't even technology for that.

BNamericas: But thinking about time-to-market for datacenters, which is critical, wouldn't it make more sense to bet on batteries instead of, say, waiting for the construction of small nuclear reactors? There are planned storage auctions…

Cunha: Yes, but these auctions are more about testing the market. And we also need to consider: for which segment? Are we talking about isolated systems in the middle of the Amazon? Even then, there's a lot of risk involved.

BNamericas: How is the development of small modular reactors, or SMRs, progressing in the country?

Cunha: We have a project starting at the Jorge de Lacerda complex, for the Carvalho thermal plant in Santa Catarina, but they're still doing soil studies. The idea is for nuclear energy to play a role in the energy transition from thermal plants.

There's another project similar to an SMR, which is a nuclear battery, also being financed but still very much in the research phase. The truth is, we'll have viable SMRs around the world by 2027.

There are already several in development, and between 2027 and 2030, we'll see a boom in these projects. But I believe there will be some consolidation too; not all of these projects will succeed in terms of cost, sales, market, delivery time and trust.

In the end, we'll have about 15 competitive companies, and many of them are studying the Brazilian market.

BNamericas: Isn't that a long time to solve the problems of curtailment, renewable intermittency, and seize the opportunity in datacenters?

Cunha: The datacenter sector has a problem, and so do we, in terms of rushing to find solutions. They have a huge demand for energy that needs to be absorbed. There isn't a viable solution for that right now.

I don't think they're going to invest in solar or wind batteries. The risk is too high. Even gas-fired thermal plants are quite complex, and they could even raise energy costs.

BNamericas: What's the outlook for progress on the Angra 3 nuclear plant? Abdan had a meeting with the government to discuss the matter.

Cunha: The issue with Angra 3 isn't whether it's worth advancing the plant or not. That's already been answered. There's a law that has already defined the need to complete the plant's construction.

The CNPE [national energy policy council] has to comply with the law. The current discussion is about rates. A concession proposal needs to be approved, including the plant's implementation schedule and rate.

I'd say there's also a political discussion going on, involving the government's role in the Eletrobras board. On the other hand, Eletrobras also wants to exit the project because they don't want to invest in Angra 3.

[Editor's note: On February 28, after almost two years of litigation, the government and the privatized energy company, Eletrobras, published the terms of an agreement discussing governance aspects and the government's stake in the company. The agreement includes an investment of 2.4bn reais for the modernization and expansion of the plant. This amount will come from debentures issued by Eletronuclear, the nuclear branch of Eletrobras.]

BNamericas: What's next on the sector's agenda?

Cunha: We have a very strong agenda in parliament, with several bills in progress that could boost the industry.

Nuclear energy is now part of the energy transition program, following the approval and signing of the law. Now, we're entering the regulatory phase, and we want to stay closely involved in this discussion. 

[Editor's note: Energy transition acceleration program Paten was enacted in January, with nuclear energy included among the beneficiaries. The program aims to encourage the replacement of energy sources with cleaner alternatives.]

We'll also continue our campaign around SMRs, which is a long-term effort, and we have two major events this year on the topic. One will take place in Rio de Janeiro from May 20-22, with over 200 speakers and debaters, including representatives from the International Atomic Energy Agency and more than 100 partner companies.

Beyond that, we're very focused on resolving issues related to Angra 3, extending the life of Angra 1, the Brazilian multipurpose reactor, which is part of the New PAC and could make Brazil self-sufficient in radiopharmaceuticals, and the Brazilian nuclear-powered submarine program.

We're continuing with these technical agendas and not opening new ones, while we're also opening legislative agendas.