Valar, a nuclear startup based in San Francisco, has announced a partnership with Nvidia to develop data centers designed to minimise water consumption, addressing one of the technology industry's most pressing operational challenges.
The collaboration comes as data centre operators face mounting pressure to reduce their environmental footprint. Traditional facilities rely heavily on water-intensive cooling systems, particularly in regions experiencing prolonged drought conditions.
The Partnership Structure
Under the agreement, Valar will supply small modular nuclear reactors to power Nvidia's new data centre campuses. The nuclear approach eliminates the need for traditional evaporative cooling towers that consume millions of gallons of water annually.
Nvidia will contribute its expertise in high-performance computing infrastructure, deploying GPU clusters that can operate efficiently under different thermal conditions than conventional server setups.
The first facility is planned for a site in the southwestern United States, where water scarcity has prompted several municipalities to impose restrictions on industrial usage.
Water Conservation at Scale
Data centres currently account for approximately 1% of global electricity consumption, with cooling systems representing up to 40% of their total water usage in certain climates.
Valar's nuclear approach sidesteps this problem entirely. By generating power on-site without combustion, the reactors produce minimal thermal waste requiring dissipation. This allows the facilities to operate using air cooling or closed-loop water systems that recirculate coolant rather than consuming fresh water continuously.
Industry analysts estimate that a medium-sized data centre using traditional cooling can withdraw between 1 million and 5 million gallons of water daily from local supplies.
Economic Implications for the Sector
The partnership signals a potential shift in how technology companies evaluate infrastructure investments. Water rights and availability are increasingly factoring into site selection decisions for large-scale computing facilities.
For Nvidia, securing stable power generation removes a variable that has complicated expansion plans in water-stressed regions. The company has faced community opposition in several states where proposed data centre campuses drew concerns about resource consumption.
Valar gains a major anchor customer for its reactor technology, which remains under development. The startup has been seeking partnerships that demonstrate commercial viability for advanced nuclear designs.
Investor Interest in Clean Infrastructure
Venture capital firms have shown renewed interest in nuclear startups following regulatory changes and growing corporate demand for carbon-free power at scale. Valar's Nvidia deal provides visible validation for its business model.
The data centre market itself is projected to grow substantially as artificial intelligence applications drive demand for computing capacity. Companies that can deploy facilities without triggering water conflicts will hold a competitive advantage in securing locations.
Regulatory Path Forward
Both companies must navigate regulatory approvals before construction can begin. Small modular reactors require Nuclear Regulatory Commission licensing, a process that typically spans several years.
Nvidia's involvement could accelerate permitting by demonstrating clear commercial applications and corporate backing. The partnership also positions the project within current federal initiatives supporting advanced nuclear technology.
State-level approvals for water usage permits may prove simpler given the reduced consumption profile of the proposed facilities compared to conventional data centre designs.
Industry Response
Other technology companies have pursued similar strategies, though none have announced comparable nuclear partnerships. Microsoft has explored small modular reactor agreements, while Google has committed to purchasing power from existing nuclear facilities.
The approach reflects broader industry recognition that renewable energy certificates alone cannot address the full environmental profile of energy-intensive computing operations.
Traditional utilities have taken notice. Several major power providers have begun developing specialised tariffs for large data centre customers seeking direct nuclear supply arrangements.
Timeline and Next Steps
Valar and Nvidia expect to file preliminary permit applications with federal regulators within the next twelve months. Site assessment work at the southwestern location is already underway.
The companies have not disclosed the expected capacity of the initial facility or the total investment value of the partnership. A full-scale commercial deployment likely remains several years away given the complexity of nuclear infrastructure development.
Watch for announcements regarding additional site locations and any joint statements on technology specifications as the permitting process advances. The success of this initial project could determine whether other nuclear startups pursue similar data centre partnerships.
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Microsoft has explored small modular reactor agreements, while Google has committed to purchasing power from existing nuclear facilities.The approach reflects broader industry recognition that renewable energy certificates alone cannot address the full environmental profile of energy-intensive computing operations.Traditional utilities have taken notice. Several major power providers have begun developing specialised tariffs for large data centre customers seeking direct nuclear supply arrangements.Timeline and Next StepsValar and Nvidia expect to file preliminary permit applications with federal regulators within the next twelve months.
