Technology companies that are planning to use certain contracts for nuclear energy to meet increased data center power for artificial intelligence might have hit a roadblock.
The Federal Energy Regulatory Commission rejected a request late last week to increase the amount of power that a Pennsylvania nuclear power plant can offer directly, known as a behind-the-meter contract, to an Amazon data center. The web giant acquired the data center in a $650 million deal from Talen Energy earlier this year. The data center is adjacent to Talen Energy's Susquehanna nuclear power plant.
Talen Energy wanted to increase the amount of nuclear power it sells from the Susquehanna plant to Amazon to 480 megawatts from the 300 megawatts that have already been approved. FERC Commissioner Mark Christie said increasing the amount of energy sent to the Amazon data center would have "huge ramifications for grid reliability and consumer costs" if approved, with a number of potential issues arising from the co-location of data centers with power plants, according to the order.
FERC said the request from grid operator PJM Interconnection, utility company PPL and Talen Energy failed to meet the high burden needed to justify changes to the standard agreement for interconnecting generating facilities.
Nuclear power has been making a comeback as cloud providers such as Amazon, Microsoft and Google search for reliable and carbon-free energy to meet the insatiable demand for data centers driven by the rise of AI as well as their own climate goals to reduce greenhouse gas emissions. Nuclear is seen as a potential alternative to fossil fuel-based power generated from oil and coal because it doesn't produce carbon emissions that contribute to climate change. And nuclear energy is considered to be more reliable than windmills and solar farms because it isn't reliant on the weather.
Data center demand has led to record-low vacancies for data centers across the nation as land with access to power becomes more difficult for companies to find, CoStar News has reported.
FERC decision
FERC rejected the request without prejudice, so the companies could come up with a revised plan. Houston-based Talen Energy said in a statement this week that it is evaluating its options to increase the power connected to Amazon’s data center campus "with a focus on commercial solutions."
"FERC’s decision will have a chilling effect on economic development in states such as Pennsylvania, Ohio, and New Jersey," Talen said.
In the meantime, development of the first phases of Amazon's data center campus and the connected 300 megawatts that have been approved can move forward, Talen said.
FERC Chairman Willie Phillips disagreed with the commission's decision, saying it "is a step backward for both electric reliability and national security.” Phillips said maintaining U.S. leadership in AI will require a massive and unprecedented investment in data centers, and access to reliable electricity is the lifeblood of those data centers.
FERC's decision isn't expected to impact Microsoft's 20-year power purchase agreement with Constellation Energy to restart a nuclear reactor on Three Mile Island in Pennsylvania, as CoStar News has previously reported. In that deal, Microsoft will not directly receive electricity from the nuclear reactor; the power plant will provide the power to the grid.
Testing ground
Recently, federal nuclear power regulators approved the first U.S. university research nuclear reactor in more than three decades. The Nuclear Regulatory Commission issued a construction permit to Abilene Christian University in Texas to build a nuclear research reactor, creating a testing ground in efforts to develop larger utility-scale reactors.
The university plans to start construction next year on a 1-megawatt molten salt research reactor at the newly completed Gayle and Max Dillard Science and Engineering Research Center. It is the first liquid salt-fueled reactor licensed by the commission and is expected to produce enough electricity for about 250 households.
Abilene Christian University, which sits two-and-a-half hours west of Dallas, has worked with the commission to resolve several technical issues with the novel design prior to the issuance of the permit, said Andrea Veil, director of the Nuclear Regulatory Commission's Office of Nuclear Reactor Regulation.
The molten salt reactor will hopefully be designed efficiently and deployed in a commercial system, officials said. Abilene Christian University and its operating partner Natura plan to submit an operating license application in the first half of 2025 after completion of the plant's construction.