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Data centers have become essential infrastructure that powers our daily lives as the digital economy continues to expand. However, this accelerated expansion comes at a cost.
To address the dual challenges of energy reliability and decarbonization as demand for energy-intensive data centers rises, green molecules™ such as hydrogen, Renewable Natural Gas (RNG), and nuclear energy are emerging as complementary solutions. Collectively, these technologies offer a pathway to establish a low-carbon, resilient energy future for data centers.
Consistent and scalable power sources are critical to meeting the demands of energy-intensive data centers. Technologies like hydrogen and Renewable Natural Gas (RNG) provide practical, sustainable alternatives to traditional fuels by stabilizing energy supplies during peak demand and serving as reliable backup power sources. These solutions not only reduce emissions but also enhance operational resilience during extreme weather events.
Nuclear energy, through advanced small modular reactors (SMRs), complements this approach by offering compact and efficient base-load power generation. SMRs can integrate seamlessly with renewable systems while enabling applications like hydrogen production and thermal energy storage. For example, nuclear-powered electrolysis can generate green hydrogen, which can fuel data center backup systems.
By leveraging these innovative energy solutions, data centers can move beyond traditional energy strategies, embracing technologies that align reliability with sustainability. This integration represents a pivotal shift toward a low-carbon, energy-resilient future for digital infrastructure.
The decarbonization of data centers is becoming a critical priority as global emissions continue to rise. Morgan Stanley estimates that data centers could emit 2.5 billion metric tons of CO₂ by 2030—approximately 40% of the United States’ annual emissions. This stark projection highlights the urgent need for decarbonization within the sector. The financial stakes are equally significant, with the green data center market expected to attract over $30 billion in investments worldwide by 2030.
Investments are surging in clean power development, energy-efficient technologies, and green building materials as data centers expand. Additionally, carbon capture, utilization, and sequestration (CCUS) and carbon dioxide removal (CDR) technologies are gaining momentum as companies strive to meet climate objectives. Meanwhile, advancements in cooling technologies, including AI-optimized energy management and liquid chilling, are enhancing energy efficiency and creating synergies with low-carbon fuels.
While green molecules and renewable energy dominate discussions about decarbonization, nuclear energy is increasingly being recognized as a critical component of the energy mix. The market for nuclear energy in energy-intensive sectors has expanded significantly due to developments in small modular reactors (SMRs) and hydrogen-compatible reactors. To support innovation in this space, the U.S. Department of Energy has introduced grants to integrate SMRs into industrial operations, including data centers. As older, inefficient data centers are phased out, the potential to repurpose these sites with low-carbon technologies is growing, transforming liabilities into assets.
Leading companies like Microsoft and Google are actively exploring nuclear power to complement their renewable energy commitments, leveraging nuclear energy's reliability to address the intermittency of solar and wind. Microsoft has partnered with Constellation Energy to reopen Three Mile Island Unit 1 as the Christopher M. Crane Clean Energy Center, with operations expected to begin in 2028. Google is working with Kairos Power to deploy small SMRs by 2030, supporting its goal of achieving 24/7 carbon-free energy. Similarly, Amazon is investing in SMRs to achieve 100% renewable energy by 2025, while Meta plans to expand its nuclear energy capacity for AI initiatives by 1–4 gigawatts by the early 2030s.
Several critical challenges must be addressed to unlock the potential for decarbonization and resilience in the adoption of green molecules and nuclear energy in data centers. The majority of global hydrogen production is still dominated by carbon-intensive “gray hydrogen,” while green hydrogen, reliant on renewable energy, represents only a small fraction. Technologies like hydrogen fuel cells, Renewable Natural Gas (RNG) systems, and small modular reactors (SMRs) require substantial financing for production, transportation, and storage, making them more accessible to large operators. Additionally, data centers demand consistent, uninterrupted power, putting pressure on these systems to deliver reliability, scalability, and seamless integration with existing energy infrastructure—all while remaining cost-effective and efficient.
Underdeveloped infrastructure and fragmented supply chains present additional hurdles. However, gas-derived solutions like RNG offer a scalable and immediate path toward decarbonization, leveraging existing natural gas infrastructure to minimize upfront investment. RNG production depends on biogas facilities and treatment networks, which are growing steadily but still require expansion to meet increasing demand. For hydrogen, scaling production and distribution requires the development of specialized pipelines and storage systems, but natural gas-based “blue hydrogen” can act as a solution, providing low-carbon energy while green hydrogen scales over time. Similarly, public concerns around nuclear safety and challenges like waste management remain, but advancements in SMRs and related technologies are making nuclear energy more accessible and efficient. Retrofitting existing facilities to support these technologies offers a cost-effective bridge to a low-carbon future, leveraging infrastructure already in place.
Policy and market barriers play a dual role as both enablers and opportunities for growth. While inconsistent and fragmented state-level policies in the United States create regulatory uncertainty, they also highlight the need for targeted investment and leadership to bridge these gaps. Federal initiatives like the Inflation Reduction Act (IRA), which provides tax credits for hydrogen production, showcase the growing recognition of green molecules' potential, even as renewable fuels remain underfunded compared to renewable electricity. These gaps present a unique opportunity to champion the environmental and economic benefits of green molecules over fossil fuels.
This is why Energy Capital Ventures is focused on advancing green molecules by supporting innovative startups in hydrogen, Renewable Natural Gas (RNG), and other low-carbon solutions. Through strategic investments and partnerships, we aim to scale technologies that leverage existing infrastructure, enhance energy resilience, and drive decarbonization, positioning us at the forefront of the evolving energy landscape.
Globally, startups are tackling the challenges of green molecule and nuclear energy adoption in energy-intensive sectors like data centers. Here are some that are making strides in the space:
Venture capital is instrumental in scaling these innovations, driving the adoption of green molecules to meet the growing energy demand of data centers globally. Investments are growing in regions like the EU, where the Green Deal prioritizes hydrogen infrastructure, and in the U.S., where the IRA incentivizes renewable fuels. Energy Capital Ventures prioritizes funding startups that are pioneering green molecule solutions to meet the growing energy demands of data centers, paving the way for resilient, low-carbon infrastructure.
