In a significant regulatory setback for Amazon, the Federal Energy Regulatory Commission (FERC) has rejected a proposal that would have allowed Amazon to increase its power usage from the adjacent Susquehanna nuclear plant, owned by Talen Energy Corp. The decision, made on November 2, 2024, was passed with a 2-1 vote, where FERC Chairman Willie Phillips dissented, expressing concerns over electricity reliability and national security [a6186230].
This ruling comes in the wake of Amazon Web Services' $650 million investment in a 960-megawatt data center campus, which included a long-term power purchase agreement with Talen. The proposal aimed to increase onsite power usage from 300 megawatts to 480 megawatts, a move that faced opposition from major utility owners, including American Electric Power Co. and Exelon Corp. [a6186230].
The implications of the FERC ruling extend beyond Amazon and Talen, affecting other energy generators like Vistra Corp. and Constellation Energy Corp., which had anticipated entering into more power-sales agreements with technology companies. PJM Interconnection, the regional transmission organization, had warned of a potential shortfall in generating supply by 2030, raising alarms about the reliability of electricity supply in the region [a6186230].
This decision is particularly relevant as Amazon continues to pursue nuclear energy investments, having recently led a $500 million funding round for X-Energy Reactor, a company focused on small modular nuclear reactors (SMRs). This investment is part of Amazon's strategy to meet the growing energy demands of its data centers, with plans to bring over 5 gigawatts of power online by 2039 [4bc210f9].
The rejection of the power agreement highlights the ongoing challenges in balancing the energy needs of large tech companies with the regulatory and reliability concerns of utility providers. As the demand for electricity from data centers surges, driven by advancements in artificial intelligence and other technologies, the energy landscape continues to evolve, prompting discussions about sustainable and reliable energy sources [fe864103].