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