America’s nuclear power reactors have been a primary focus for tech businesses searching the nation for electrical supply.
About one-third of the nuclear power reactors in the United States are in negotiations with tech companies to supply electricity for new data centers that are required to satisfy the needs of the rise in artificial intelligence.
According to persons familiar with the situation, Amazon Web Services is close to reaching an agreement with Constellation Energy, the largest owner of nuclear power plants in the United States, for direct electricity provided from a nuclear facility on the East Coast. The Pennsylvania data center fueled by nuclear power was acquired by the Amazon.com subsidiary for $650 million in a different deal in March.
The talks have the potential to remove reliable power generation from the grid at a time when concerns about reliability are growing throughout a large portion of the United States and new electricity users, such as manufacturing, transportation, and artificial intelligence, are dramatically raising the need for electricity in certain areas of the nation.
Nuclear-powered data centers would match the most dependable workhorse on the grid with affluent clients who require carbon-free power around-the-clock, probably expediting the construction of additional data centers required in the global AI race.
To fulfill their increasing power needs, IT businesses would effectively be diverting current electrical resources—rather than creating new green energy. This can push back emission reduction targets and increase costs for other consumers.
The talks have the potential to remove reliable power generation from the grid at a time when concerns about reliability are growing throughout a large portion of the United States and new electricity users, such as manufacturing, transportation, and artificial intelligence, are dramatically raising the need for electricity in certain areas of the nation.
Nuclear-powered data centers would match the most dependable workhorse on the grid with affluent clients who require carbon-free power around-the-clock, probably expediting the construction of additional data centers required in the global AI race.
To fulfill their increasing power needs, IT businesses would effectively be diverting current electrical resources—rather than creating new green energy. This can push back emission reduction targets and increase costs for other consumers.
Tensions over grid dependability, cost, economic growth, and climate goals are being exacerbated by the nuclear-tech marriage in states including Connecticut, Maryland, New Jersey, and Pennsylvania.
The consumer advocate for the state of Pennsylvania, Patrick Cicero, expressed concern over Amazon’s transaction. As for cost and dependability, Cicero expressed his concerns if “massive consumers of energy kind of get first dibs.” According to him, it’s uncertain if the state currently has the regulatory power to get involved in these deals.
Cicero remarked that no one had ever been able to tell a nuclear power plant, “We’ll take all the energy you can give us.”
A representative for Amazon stated, “We’re exploring new innovations and technologies, as well as investing in other sources of clean, carbon-free energy to supplement our wind- and solar-energy projects, which depend on weather conditions to generate energy.”
A new agreement
Up to 960 megawatts of electricity, sufficient to power hundreds of thousands of homes, can be received by the data center that Amazon purchased in Pennsylvania. The purchase increased interest in “behind-the-meter” agreements, where a big consumer gets electricity straight from a facility.
Because of the relatively recent arrangements, little to no new grid infrastructure is required, allowing data centers to be erected years sooner. Transmission and distribution costs, which account for a significant portion of power bills, might also be avoided by data centers.
The biggest competitive electricity generator in the US, Vistra, has seen a more than twofold increase in share price this year. The business has been negotiating behind-the-meter contracts with gas and nuclear power stations.
In this instance, the client approached us and numerous other businesses in the sector, saying, “I need as much power as you can make available,” according to Jim Burke, CEO of Vistra.
With 14 nuclear power reactors under its ownership and producing over 25% of the country’s nuclear power, Constellation Energy has seen a 70% increase in share price this year.
Joseph Dominguez, president and CEO of Constellation, stated that there are still a lot of areas with an excess of power, ranging from Pennsylvania to Illinois. According to him, that makes space for data centers.
He claimed that the cost of re-licensing would be covered by contracts with data centers prepared to pay a premium, extending plant life by an additional 20 years and enabling improvements that might increase nuclear power output.
Dominguez warned that “we would lose the nuclear weapons once more if we did not have those items. We are returning to our previous location.”
Much discussion and debate
The exact amount of power that data centers will use is still unknown. According to the Electric Power Research Institute, estimates range from about 4% of the power used in the United States last year to between 4.6% and 9% by 2030.
When he backed financial incentives for data centers a few years ago, Connecticut state senator Norm Needleman never imagined disconnecting the state’s current power supply from the grid. Then a developer suggested that the Millstone nuclear facility be connected to a data center.
Needleman questioned, “If we lose a carbon-free resource, what are we going to replace it with?,” as his measure mandating a study of such projects failed this year.
Commissioner of Connecticut’s Department of Economic and Community Development Daniel O’Keefe suggested that if the plan is implemented carefully, it might succeed. He claimed that since neighboring states are building data centers and all New England customers are paying for the necessary grid modifications, Connecticut should profit economically.
Regardless of whether these data centers are located in Connecticut or not, our constituents are paying for them, according to O’Keefe.
According to Ralph LaRossa, CEO of Public Service Enterprise Group in New Jersey, the company has been in discussions with data centers for direct power sales, which could help the state’s endeavors to establish an AI hub for economic development.
PSEG-owned nuclear power reactors provide for almost 40% of the state’s electricity supply.
As per Brian Lipman, director of the New Jersey Division of Rate Counsel, the state’s consumers have contributed hundreds of millions of dollars, as well as roughly $300 million annually over the last six years to keep its facilities running.
Asking Lipman what happened to that investment.
As Lipman said, without nuclear power, New Jersey will not be able to achieve its goal of producing all sustainable energy by 2035. PSEG chose not to respond.
Energy needs
The PJM Interconnection, a regional transmission network and power market that supplies 13 states from Virginia to Illinois as well as Washington, D.C., is the setting for many of the negotiations. It promised to perform analyses and collaborate with the owners of the plant and the transmission to prevent reliability difficulties and other issues.
A hearing regarding Amazon’s Pennsylvania deal was requested by utilities American Electric Power and Exelon last week at the Federal Energy Regulatory Commission. They contended that up to $140 million in costs could be passed on to other customers and that the data center “should not be allowed to operate as a free rider,” benefiting from a transmission system that others pay for.
“Misguided attempt to stifle this innovation,” is how Talen Energy, the company that developed the data center and runs the nuclear plant, described the proposal.
The extent to which data centers housed in nuclear power reactors would require grid power is unknown. While there are occasional failures, nuclear power plants are significantly more dependable than conventional forms of power production.
According to persons familiar with the event, a Talen nuclear reactor experienced an outage last fall that required the data center site to draw power from the grid before Amazon purchased the Pennsylvania data center. The individuals stated that since the unanticipated requirement for grid power, more system safeguards had been implemented to prevent a recurrence.
