Microgrids come out winner in a new UK study that compares renewable microgrids and small modular reactors (SMRs) for cost and speed to power.
The Center for Net Zero found that microgrids can be built for data centers in half the time of SMRs at 43% less cost.
The study comes as UK data centers, like their US counterparts, are considering onsite power because they can’t easily access grid power. Grid infrastructure can’t keep up with the rising electric demand created by AI.
Over the next five years, the UK needs to construct five times as much transmission infrastructure as it has built over the past 30 years. And unfortunately, the UK no longer “has a great track record” for quick construction, says the paper. “This makes circumventing the grid and connecting directly to new sources of power, via microgrids and private wires, increasingly appealing.”
Microgrids cheaper with or without solar
The study modeled three on-site power options for a 120-MW data center:
- An SMR, based on the Rolls-Royce technology selected by the UK government for its first three SMRs
- A renewable microgrid with offshore wind, battery energy storage, solar PV and a natural gas backup
- A microgrid without solar in a land-constrained area
The renewable/natural gas microgrid proved 43.4% less costly than the nuclear SMR in terms of capital and operating costs, annuitized over the operational lifetime of generation assets.
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With the solar removed from the microgrid, the savings fell to 42.1% and emissions rose slightly.
Nuclear costs rising, renewable costs falling
The calculation assumed a $77/MWh cost for nuclear power — the cost supplied by the Rolls-Royce project. However, that figure is optimistic, with some skeptics expecting the price to be closer to $241/MWh, according to the study.
In addition, while renewable energy and battery costs are falling, nuclear demonstrates “little evidence of cost learning, with global construction costs remaining high and in some cases increasing over time,” says the paper.
For example, the paper cited the cost escalation of the 3200-MW Sizewell C nuclear power station proposed in Suffolk, England. Initial estimates pegged the costs at $27 billion, but four years later, the price tag has risen to $51 billion.
Nuclear costs “have remained stubborn (or increased),” while global costs fell 90% for batteries, 89% for solar, and 69% for offshore wind from 2010 to 2022, the paper says.
It’s unclear whether SMRs will escalate in cost the same as large projects like Sizewell C. Data remains scarce because so few SMRs have been built. Only three are now operating worldwide – one in China and two in Russia.
Speed to power
Offshore wind takes about five years to install in the UK, making it the slowest to build among the microgrid generation resources modeled.
Meanwhile, the UK government expects the Rolls-Royce SMR to take 10 years to build, although the Russian and Chinese SMRs took 12-13 years, says the paper.
The paper finds that the UK needs to consider several policy reforms to help data centers build microgrids, including easier regulation and siting, microgrid-specific network charges, and electricity market design that considers microgrids.
The paper is available from the Center for Net Zero, which was founded by Octopus Energy but operates independently as an open-access research organization funded by government and philanthropy.
