Xendee Blog Meeting Energy Demand for Data Centers With DER and Future SMR - Part 2 The Comparative Analysis and Optimal Solution

A multi-year optimization approach combining Distributed Energy Resources (DERs) and Small Modular Reactors (SMRs) can significantly reduce energy costs and emissions for data centers compared to relying solely on utility power, as demonstrated through case studies in Santa Clara, CA, and Ashburn, VA. Part 2: The Comparative Analysis and Optimal SolutionBy: Giovanni Maronati, Michael Stadler, Timothy Grunloh, Reynaldo Guerrero, Nishaant SinhaIntroduction & Part 1 RecapThe exponential growth of data center energy demand, particularly driven by advancements in Artificial Intelligence (AI), 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[1],[2]. This rise is primarily driven by the increasing adoption of AI servers, which consume significantly more power than traditional systems. For instance, a single AI server of a major manufacturer of AI 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[3],[4].However, existing grid infrastructure is increasingly constrained, particularly in regions with concentrated data center activity, such as Northern Virginia's "Data Center Alley"[4]. 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, in Part 1 of this blog series we introduced a two-stage, multi-year approach that 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 Part 2 of this blog series, 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.Now let's get into the analysis. Comparative Analysis of Scenarios: Utility-Only, Utility with SMR only vs. Adopting a Multi-Year Approach with DERs, SMRs, and utility.