Harrisburg, Pennsylvania – Looking for a quick solution to the fast-growing electric power grid, tech giants are increasingly looking to strike deals with power plant owners to plug them in directly, avoiding a longer and more expensive process of installation in a strained electric grid that serves everyone.
It raises questions about whether shifting power to higher-paying customers will leave enough for others and whether it is fair to exempt large energy users from paying for the grid. Federal regulators are trying to figure out what to do about it, and fast.
Front and center is Amazon Computing Services’ Amazon Web Services data center, next to the Susquehanna nuclear plant in eastern Pennsylvania.
The arrangement between the plant’s owners and AWS — called “behind the meter” — is the first to come before the Federal Energy Regulatory Commission. For now, FERC has rejected a deal that could eventually send 960 megawatts — about 40% of the plant’s capacity — to the data center. That’s enough to power more than half a million homes.
This leaves the deal and others likely to follow in limbo. It’s not clear when FERC, which blocked the deal on procedural grounds, will take up the matter again or how a change in presidential administrations might affect things.
“Businesses, they’re very frustrated because they have a really big business opportunity now,” said Bill Green, director of the MIT Energy Initiative. “And if they’re five years behind on the waiting list, for example — I don’t know if it’ll be five years, but anyway — they might miss out on the job altogether.”
The rapid growth of cloud computing and artificial intelligence It has fueled demand for data centers that need power to run servers, storage systems, networking equipment and cooling systems.
These are proposals driven to bring nuclear power plants out of retirement, develop small modular nuclear reactors and build utility-scale renewable facilities or new natural gas plants. In December, California-based OKLO announced an agreement to provide the data center developer with 12 gigawatts of small nuclear reactors powered by nuclear waste.
Federal officials say the rapid development of data centers is vital to the economy and national security, including keeping pace with China in the artificial intelligence race.
For AWS, the deal with Susquehanna satisfies its need for reliable power that meets its internal requirements for sources that do not emit greenhouse gases aimed at the planet, such as coal, oil or gas plants.
Big Tech also wants to stand up quickly. But Tech’s voracious appetite for energy comes at a time when the energy supply is already being strained by efforts to move away from planet-warming fossil fuels.
They can build data centers within two years, said Aaron Tingum of the Data Center Alliance. But in some areas, connecting to a crowded electricity grid can take four years, and sometimes much longer.
Plugging directly into a power plant would take years of development timelines.
In theory, the AWS deal would allow Susquehanna to sell power for more than it would through selling into the grid. The deal is expected to bring Talen Energy, Susquehanna’s majority owner, up to $140 million in electricity sales in 2028, though it has not disclosed exactly how much AWS will pay for power.
The profit potential is one that holds other nuclear plant operators, in particular, after years of financial distress and frustration with how to pay in broader electricity markets. Many say they have been forced to compete in some markets against a deluge of cheap natural gas as well as state-subsidized solar and wind.
Power station owners also say the arrangement benefits the wider public, by bypassing the costly construction of long power lines and leaving transmission capacity on the grid to everyone.
Analysts say a positive ruling from FERC could open the door to many massive data centers and other massive energy users such as hydrogen plants and bitcoin miners.
FERC’s 2-1 denial in November was procedural. Recent comments by the commissioners indicate that they were not prepared to determine how to regulate such a new matter without further study.
In the meantime, the agency is hearing arguments for and against the Susquehanna-AWS deal.
Analytics Watch, the Atlantic Network’s market watchdog, wrote in a filing to Ferc that the impact would be “extreme” if the Susquehanna-AWS model were extended to all nuclear power plants in the territory.
She said energy prices will increase dramatically and there is no explanation as to how the growing energy demand will be met even before large power plants drop out of the supply mix.
Separately, two electric utility owners—which in liberalized states make money from building the grid and providing power—have protested that the Susquehanna-AWS arrangement amounts to eliminating the grid that regular customers pay to build and maintain. Exelon, Ohio-based Columbus, says the Susquehanna-AWS arrangement will allow AWS to avoid $140 million annually that it would owe.
Susquehanna owners say the data center won’t be on the network and wonder why they would have to pay to maintain it. But critics claim that the power plant itself benefits from taxpayer subsidies and taxpayer-subsidized services, and should not be able to cut deals with private customers that might increase the costs of others.
Jackson Morris of the Natural Resources Defense Council said FERC’s decision will have “huge ramifications for the entire country” because it will set a precedent for how FERC and GRID operators handle similar requests from data center companies and nuclear plants.
Stacy Purbour, vice president of American Electric Power, told FERC at a November hearing that it needed to act quickly.
“The timing of this case is before us,” she said, “and if we take the usual five years to get this perfect, it will be too late.”
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