The Federal Energy Regulatory Commission (FERC) on Friday rejected a proposal that would have allowed Talen Energy Corp.’s Susquehanna nuclear power plant. to redirect part of its electricity production to an Amazon data center.
In Friday’s order, FERC ruled on a technical “connection services agreement” that would enable a Pennsylvania nuclear power plant to directly power an adjacent data center campusbypassing the 13-state eastern U.S. network operated by PJM Interconnection LLC. The request was denied because PJM, the regional transmission organization, failed to show why a special contract should be awarded to Amazon.
A deal that was supposed to allow the largest data center developers to quickly gain access to energy without waiting years to build new power plants has fizzled out.
The AI development plan will slow down
FERC’s ruling creates a barrier to quickly meeting the enormous demand for electricity needed to power data centers as artificial intelligence rapidly develops.
Nuclear power could help provide needed clean energy for energy-hungry data centers. However, it now seems more likely that power for data centers will have to come from new reactors, which are unlikely to be available any time soon.
Temporary failure
Paul Patterson, an analyst at Glenrock Associates LLC, believes that although in the long term the FERC ruling may be changed, there is great uncertainty about the potential of colocation, i.e. a service consisting in renting space in a server room and providing the space necessary for the proper operation of servers and IT equipment , at nuclear power plants.
Constellation Energy Corp., the largest U.S. nuclear operator, views the ruling as a temporary setback and “not FERC’s final word on colocation,” CEO Joe Dominguez said.
ClearView Energy Partners LLC analysts led by Timothy Fox noted in a report that FERC’s decision does not reverse the 300 megawatts of power Amazon has already approved to receive from the Pennsylvania plant, and that PJM and the parties can file a motion for reconsideration.
Microsoft will have no problem
Another was the Constellation deal from September on restarting the closed Three Mile Island power plant in Pennsylvania and selling the power to Microsoft Corp. This deal likely won’t face the same resistance because the reactor is now dormant. Getting it back up and running will mean new supplies, not a diversion of power from existing customers. However, deliveries for Microsoft areis a thing of the future, because the reactivated reactor is not expected to be operational before 2028.
Tech companies want to cover the costs
The Pennsylvania deal was symbolic of the inherent incompatibility between a rapidly growing technology sector and the much slower pace of planning for the development of the energy infrastructure needed to power energy-intensive data centers.
Constellation’s Dominguez noted that technology companies have said they are willing to cover the costs of building the plant and transmitting it. “It’s not a matter of dollars, it’s a matter of speed of implementation” he said during an earnings conference call.
