Nuclear Hitch: Can FERC Rejection Threaten Data Center Power Deals?

Nov. 12, 2024
The Federal Energy Regulatory Commission voted 2-1 to scuttle a request by plant owner Talen Energy and PJM to transfer some 480 MW of power to help support a new data center operated by Amazon Web Services (AWS).

The movement to repurpose current or retired nuclear power plants to meet growing demand from data centers may have taken a big hit with a federal ruling rejecting one expansion deal in the PJM Interconnection grid system.

The Federal Energy Regulatory Commission voted 2-1 to reject a request by plant owner Talen Energy and PJM to expand a deal to transfer some 480 MW of nuclear energy to help support a new data center operated by Amazon Web Services (AWS). In March, AWS announced it was acquiring the Cumulus data center complex in Pennsylvania,  to be directly connected to the nearby Susquehanna Nuclear Generating plant.

Some other entities, including utilities AEP and Exelon, protested the agreement to allocate direct power to the new data center, calling it unfair to other customers in the system that might have to bear transmission infrastructure expansion costs.

“Exelon and AEP state that it is unclear what steps have been taken to ensure that any such withdrawal of power will be properly metered and accurately billed when it does occur, what the terms of that arrangement will be, who the parties to it are, and if costs are incurred as a result of the Co-Located Load continuing to operate, who is financially responsible,” reads the FERC decision.

Essentially, the two utilities argued that they supported the concept of co-located load and would work with data centers to meet their power needs and desire for carbon-free electricity. At the same time, they added, this co-located load still requires grid infrastructure, and the data center customer and/or facility owner should pay for that.

FERC Commissioners Mark Christie and Lindsay See sided with the complaining utilities, while FERC Chairman Willie Phillips dissented, calling it a “step backward for both electric reliability and national security.”

The growing specter of artificial intelligence and hyperscale data center capacity in the future is generating massive concern among facility owners, tech companies, utilities and economic sector experts worried that the utilities don’t have enough power to meet these new projects.  

Phillips argued that PJM proved it could handle the new interconnection agreement adequately.

“Electric reliability is the Commission’s job number one.  And I believe that PJM addressed those issues comprehensively in its filing,” the FERC Commissioner wrote. “PJM supports its application with a detailed analysis of the reliability implications of adding an incremental 180 MWs on top of the already-allowed-for 300 MWs, and concludes that up to 480 MWs, no transmission upgrades are required.”

Data center giants such as AWS, Microsoft, Google and Oracle are exploring new nuclear projects, including future small modular reactors, to meet both power resiliency needs and sustainability goals. It is not known how the FERC ruling would impact the recently announced nuclear PPA that Microsoft signed with Constellation Energy to support a restart of the closed Three Mile Island Unit 1.

 

About the Author

Rod Walton, Managing Editor | Managing Editor

For Microgrid Knowledge editorial inquiries, please contact Managing Editor Rod Walton at [email protected].

I’ve spent the last 15 years covering the energy industry as a newspaper and trade journalist. I was an energy writer and business editor at the Tulsa World before moving to business-to-business media at PennWell Publishing, which later became Clarion Events, where I covered the electric power industry. I joined Endeavor Business Media in November 2021 to help launch EnergyTech, one of the company’s newest media brands. I joined Microgrid Knowledge in July 2023. 

I earned my Bachelors degree in journalism from the University of Oklahoma. My career stops include the Moore American, Bartlesville Examiner-Enterprise, Wagoner Tribune and Tulsa World, all in Oklahoma . I have been married to Laura for the past 33-plus years and we have four children and one adorable granddaughter. We want the energy transition to make their lives better in the future. 

Microgrid Knowledge and EnergyTech are focused on the mission critical and large-scale energy users and their sustainability and resiliency goals. These include the commercial and industrial sectors, as well as the military, universities, data centers and microgrids. The C&I sectors together account for close to 30 percent of greenhouse gas emissions in the U.S.

Many large-scale energy users such as Fortune 500 companies, and mission-critical users such as military bases, universities, healthcare facilities, public safety and data centers, shifting their energy priorities to reach net-zero carbon goals within the coming decades. These include plans for renewable energy power purchase agreements, but also on-site resiliency projects such as microgrids, combined heat and power, rooftop solar, energy storage, digitalization and building efficiency upgrades.

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