Utility giants American Electric Power (AEP) and Exelon have lodged a formal objection with the Federal Energy Regulatory Commission (FERC) against Talen Energy’s nuclear power deal with tech behemoth Amazon. The issue at hand stems from Amazon’s acquisition of a nuclear-powered datacenter from Talen Energy earlier this year, allowing Amazon access to 480 MW of power from the Talen nuclear plant in Susquehanna, Pennsylvania, with the potential to increase to 960 MW in the future. This partnership has sparked a dispute over the revised interconnection service agreement (ISA) between Talen and PJM Interconnection, the regional power grid operator for much of the eastern US.
AEP and Exelon are raising concerns over the new ISA, claiming that Amazon and Talen are receiving undue advantages at the expense of other PJM ratepayers. The crux of the issue lies in the datacenter’s capability to draw power from one of the two reactors at the Susquehanna nuclear plant in case of an outage, potentially resulting in reduced electricity supply for PJM customers and increased costs for them. The complainants argue that the datacenter, despite not being directly connected to the grid, still benefits from it and therefore should share in the responsibility of maintaining the PJM grid.
The objection highlights a loophole in the ISA that categorizes the datacenter power load as “out-of-network,” despite its synchronization with the PJM grid and potential reliance on its resources in cases of emergency. AEP and Exelon project that the arrangement could lead to a cost burden of $58 million to $140 million per year on other PJM customers, a contention supported by an analysis from Concentric Energy Advisors.
Talen Energy has vehemently denied the allegations, dismissing the complaint as baseless and emphasizing that the ISA amendment was agreed upon by all parties involved. The company argues that the growing demand for power driven by artificial intelligence and datacenters necessitates innovative solutions, and the agreement with Amazon is in line with this evolving landscape.
The outcome of FERC’s review of the ISA is expected to have far-reaching implications for the datacenter and energy industries. As datacenter power consumption is projected to skyrocket in the coming years, the need for reliable and cost-effective power sources becomes increasingly urgent. The dispute underscores the complex interplay between power firms, tech companies, and regulatory bodies in meeting the evolving energy demands of the digital age.
While Amazon declined to comment on the matter, the clash between traditional utility players and tech giants over power agreements signals a broader shift in the energy landscape. As technology continues to reshape the way we consume and generate power, the resolution of this dispute will set a precedent for future collaborations between datacenters and energy providers.