Talen Energy, a US-based energy company, is facing opposition from electric utilities such as American Electric Power and Exelon over its recent deal with Amazon for a data center. The utilities argue that the agreement could lead to an increase in power bills for the general public. Talen Energy had announced in March that it would sell electricity and a data center campus at its nuclear power plant in Pennsylvania to Amazon Web Services, providing up to 960 megawatts of electricity for its data centers. The coalition of utilities has asked the Federal Energy Regulatory Commission to further investigate the agreement or scrap it, claiming that it could shift an unfair cost of $140 million annually to regular ratepayers [d807fc0f].
The opposition from electric utilities highlights the potential impact of the increasing demand for electricity from data centers, driven by the growth of artificial intelligence (AI) and the need for computational capabilities among tech companies. The energy consumption of data centers in the US is predicted to reach 6 percent of the country's total electricity by 2026. To meet this demand, partnerships between tech companies and nuclear power plants, like the one between Amazon and Talen Energy, have emerged. However, these partnerships have also sparked concerns about power prices and the ability to achieve emission-cutting goals. The push for nuclear power for AI data centers has led to the reversal of nuclear plant closures and the development of new nuclear initiatives, including small modular reactors [e087e391].
The Biden administration's climate law, which aims to reduce emissions, will heavily rely on the construction of transmission lines. However, if the construction is not accelerated, the law will miss out on about 80 percent of emission reductions by 2030. This highlights the need for significant investment in the power grid and the development of new, cleaner sources of electricity to meet the growing energy demand [fe864103].
The opposition to Talen Energy's deal with Amazon reflects the ongoing challenges and debates surrounding the energy crisis in the US. As the demand for power continues to rise due to technological advancements, clean technology, and renewable energy, there is a pressing need to build more energy generation capacity. This includes not only nuclear power plants but also clean tech factories, electric vehicles, and appliances. The US will need to invest in upgrading transmission lines and building new sources of electricity to ensure a reliable and sustainable energy supply [fe864103].
In the midst of this energy crisis, nuclear stocks like Constellation Energy and Vistra are set to benefit from the increasing demand for power. Data centers, including those for AI, require a significant amount of electricity to operate, creating opportunities for nuclear energy companies. Vistra, with a Zacks Rank #1 (Strong Buy), has a positive earnings outlook and potential long-term growth. Constellation Energy, the nation's largest producer of clean, carbon-free energy, also enjoys robust results and increased earnings estimates. These stocks offer exposure to the growing demand for nuclear energy and the AI theme [fcb6ad35].