Amazon's data center bid on nuclear energy is rejected by regulators. (Photo: iStock)
U.S. energy regulators have rejected an amended interconnection agreement that would have linked an Amazon data center in Pennsylvania directly to a nuclear power plant, a move that could have significant implications for the revival of nuclear energy in the AI era.
FERC cites grid stability, consumer cost concerns
The Federal Energy Regulatory Commission (FERC) rejected the proposal, citing concerns over potential risks to regional power supply stability and raise utility bills. Mark Christie, one of the commissioners, noted in a statement that the co-location arrangement "present an array of complicated, nuanced and multifaceted issues, which collectively could have huge ramifications for both grid reliability and consumer costs."
Amazon’s $650 million acquisition of a nuclear-powered data center in March marked a first in the industry and was aimed at meeting the company's growing demand for low-carbon energy. However, the regulatory approval process has been rocky. Talen Energy, which operates the Susquehanna nuclear plant, had sought to amend the plant's interconnection agreement to accommodate Amazon's growing energy needs, increasing power supply from 300MW to 480MW. Despite these efforts, the proposal was ultimately rejected by FERC.
In response, Talen Energy issued a statement defending the fairness and reasonableness of the interconnection agreement, arguing that it aligned with the best interests of consumers. The company warned that FERC's decision could trigger a "chilling effect," potentially stalling industrial development across Pennsylvania, Ohio, New Jersey, and other regions.
Talen Energy's nuclear plants in Pennsylvania. (Photo: Talen Energy)
Microsoft's nuclear plans not affected
In contrast, Microsoft's efforts to restart the Three Mile Island nuclear plant in Pennsylvania are not expected to be impacted by FERC's ruling. This is because Constellation Energy, which operates the plant, plans to supply power to the grid rather than directly to Microsoft's data centers, although Constellation has previously expressed interest in pursuing co-location arrangements.
Analysts at Jefferies expressed the surprise among investors, noting that it could negatively affect related stocks. Meanwhile, energy research firm ClearView Energy Partners predicted that, in the short term, data centers may turn to virtual power purchase agreements (PPAs), but the trend of co-location with new or existing power plants is unlikely to disappear entirely.
The FERC’s decision sent shockwaves through the market, with energy stocks, particularly those related to nuclear power, taking a significant hit. Talen Energy's stock dropped by more than 2%, Vistra fell over 3%, and Constellation Energy saw a sharp decline of 12%.
Source: Reuters、CNBC、Utility Dive
