South Dakota Republican Gov. Larry Rhoden’s proposed $300,000 nuclear energy study is a step toward the inevitable, energy and economic development professionals say.
“We’re going to ultimately have to get to nuclear,” said CEO and President of NorthWestern Energy Brian Bird during a panel discussion in Sioux Falls in October.
Emerging industries including data centers, Bird said, will “need a tremendous amount of energy to do what they need to do.”
It takes two coal or natural gas plants, or three to four renewable resource-based plants, such as wind, water or renewable natural gas, to generate the same amount of electricity as one typical nuclear reactor, according to a 2023 South Dakota Legislative Research Council memo.
Rhoden is seeking funding for the study in the next state budget. The study was proposed by his Governor’s Resilience and Infrastructure Task Force. A November news release said the task force was recommending the study “to ensure an all-of-the-above energy approach” because “more energy flexibility leads to a more stable energy supply.”
Rhoden expressed interest in nuclear energy — especially in the cheaper, small, modular reactors gaining interest across the nation — during the Tri-State Governors Conference in North Sioux City last summer, when he referenced heightened needs for power in the age of data centers and artificial intelligence.
“I think the time has come to revisit nuclear power, given the advancements in technology that have been made,” Rhoden said.
Rooms or buildings full of computer servers have been storing cellphone pictures, emails and social media accounts for years. What’s new are 100- to 1,000-acre warehouses full of servers for cryptocurrency and artificial intelligence. Those massive data centers with 30- to 1,000-megawatt loads have energy consumption equivalent to 29,000 to 800,000 residential customers.
South Dakota’s biggest data center consumes 30 megawatts, and the state has none of the vastly larger data centers that have proliferated elsewhere. Some of South Dakota’s elected officials question whether the state should incentivize the industry as many other states have, due in part to the massive energy demands of large data centers and the potential impacts on the availability and cost of electricity for other customers.
DATA CENTER ENERGY DEMANDS
Data centers make up 4.4% of annual U.S. electricity consumption, a figure that could triple by the end of the decade, according to a U.S. Congressional report.
South Dakota Public Utilities Commissioner Chris Nelson said a new power plant won’t have to be built to service every data center. The commission regulates investor-owned utility companies across the state.
Nelson said gigawatts of available electricity exist across the U.S. grid most of the time, which could be used to power data centers. The problem comes during extreme weather or peak hours, when supply gets tight.
To prevent rate and reliability impacts, data centers are increasingly required to be “interruptible customers,” shutting down or switching to backup power during peak hours, Nelson explained.
“Any data center that’s going to be built is going to have a complete backup generator on site,” Nelson said, which would likely be diesel or natural gas.
Governor’s Office of Economic Development Commissioner Bill Even said if South Dakota pursues data centers and other industries requiring more electricity — which includes value-added agriculture, such as a soybean processing plant that opened recently in Mitchell — then South Dakota will need to invest in renewable energy like wind or improved hydroelectric generation in the short term and nuclear in the long term. Utilities will likely purchase power from other areas of the United States in the meantime. North Dakota, for example, produces a significant amount of natural gas.
“If you’re trying to get online quickly and want that base load power, you’re probably going to be looking at natural gas,” Even said.
NORTHWESTERN CONSIDERING SITES FOR NUCLEAR PROJECT
Data center critics worry ushering the industry into South Dakota will increase electricity rates as utilities build more power plants and pass the costs on to customers.
Small, modular nuclear reactors could offer scalable, localized power for high-load users like data centers, minimizing costs and risk to the grid, Bird said. Ideally, he added, the reactors could be placed next to high-load users.
“They can pay the upfront cost of the nuclear power, and the consumers would be much less harmed,” Bird said.
The company is evaluating potential vendors and project sites for a small, modular reactor, aiming for a 2030 construction date. NorthWestern would also explore federal grants and financing to “keep customer rates affordable,” a spokesperson with the company said. If other on-demand energy resources are retired, such as coal, a nuclear reactor “could be a cost-effective alternative.”
Rhoden’s proposed study will look at the regulatory hurdles in pursuing nuclear energy, environmental concerns, costs, types of equipment or infrastructure needed, and other barriers at the state or local level.
South Dakota does not produce any nuclear energy, but 4% of electricity consumed in the state comes from nuclear power produced elsewhere.
South Dakota is one of 11 states that has not signed an agreement with the federal Nuclear Regulatory Commission to take over authority of radioactive materials, including issuing licenses, conducting inspections and enforcing safety regulations over the industrial, medical and academic uses of radioactive material.
If lawmakers approve the study, Lt. Gov. Tony Venhuizen said a “reasonable timeframe” would be to hire a consultant by the end of spring 2026 with results reported by the end of 2026.
“This is a topic that once you move past studying and into implementing, it becomes more controversial,” Venhuizen said. “You have to look at the recommendations and ask if it’s something to move forward with.”
ADDRESSING SUPPLY CHAIN AND NUCLEAR WASTE
The United States is the largest producer of nuclear energy in the world, though China is rapidly expanding and expected to surpass the U.S.
Uranium is mined, processed and enriched into nuclear fuel. There were three uranium mines operating in the U.S. in 2021, sourcing a fraction of the country’s need. That’s up to 10 today.
About 20% of electricity in the United States comes from nuclear energy, and nuclear power plant operators in the country source 99.8% of their uranium from other countries, including Canada, Kazakhstan and Russia, according to the U.S. Energy Information Administration.
President Donald Trump issued executive orders regarding uranium last year to streamline permitting, expedite environmental reviews and impose tariffs on imports that compete with American products.
EnCore Energy is one of the companies hoping to mine for uranium on the southern edge of South Dakota’s Black Hills. Janet Lee-Sheriff, head of communications for enCore, said the country has a “natural interest” in being self-reliant with energy.
“What is happening in your neighborhood can contribute to a solution needed for the state and country,” Lee-Sheriff said.
After uranium is mined, processed, enriched and used in nuclear power generation, radioactive waste is produced.
Eric Meyer, executive director of Generation Atomic, told attendees at the Sioux Metro Growth Alliance’s annual Growth Summit that nuclear waste is safely stored in “some of the most robust containers known to man,” adding that the containers are tested by dropping missiles on them.
Generation Atomic is a nuclear energy advocacy organization. Meyer’s presentation at the summit aimed to address concerns regarding nuclear energy, including environmental and economic impacts from such projects.
There are about 90,000 tons of nuclear waste stored at over 100 sites in 39 states. Nuclear waste is stored on the power plant’s property before being removed, dried and sealed in welded stainless steel canisters that are stored outdoors in concrete vaults on concrete pads, according to Gerald Frankel, a materials science and engineering professor at The Ohio State University. As of 2024, there were more than 315,000 bundles of spent nuclear fuel rods in the U.S., and more than 3,800 dry storage casks in concrete vaults above ground, located at current and former power plants across the country.
The United States has been working toward building a permanent disposal site for nuclear waste in Nevada since 1987, but the work has been delayed by political and legal challenges.
Bill Even, the head of the South Dakota Governor’s Office of Economic Development, said nuclear power is “arguably safer” than it used to be, and the state needs information about how it could help meet growing energy demands.
“Advancements in science and technology are marching forward at a fast pace,” Even said, “and let’s keep an open mind to what the future may hold around new technology.”
South Dakota Searchlight is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. South Dakota Searchlight maintains editorial independence. Contact Editor Seth Tupper for questions: info@southdakotasearchlight.com.