Tech companies, including Amazon Web Services, are striking deals with U.S. nuclear power plants to secure electricity for their data centers, driven by the skyrocketing demands of artificial intelligence. This move promises 24/7 carbon-free power but stirs controversy, as it could divert existing energy supplies, raise prices, and increase reliance on natural gas. These nuclear-powered data centers might accelerate the AI race, but they also spark debates over economic development, grid reliability, and climate goals. Could this be the future of tech or a risky gamble with unforeseen consequences?
As reported by WSJ, tech businesses searching the country for electrical supplies have focused on one important target: America’s nuclear power facilities.
The owners of about one-third of the United States’ nuclear power reactors are in negotiations with technology companies about providing electricity to new data centers needed to satisfy the needs of an artificial intelligence boom.
According to persons familiar with the situation, Amazon Web Services is negotiating an agreement with Constellation Energy, the largest owner of nuclear power plants in the United States, to supply electricity straight from a nuclear facility on the East Coast. In a second transaction in March, Amazon.com bought a nuclear-powered data center in Pennsylvania for $650 million.
The discussions have the potential to remove stable power generation from the grid at a time when reliability concerns are growing across much of the United States and new types of electricity users—such as AI, manufacturing, and transportation—are significantly increasing demand for electricity in certain parts of the country.
Nuclear-powered data centers would connect the grid’s most reliable workhorse with a wealthy client seeking 24/7 carbon-free power, perhaps hastening the expansion of data centers required in the global AI race.
However, instead of generating additional green energy to fulfill their increasing power demands, tech corporations would effectively reroute current electrical supplies. This could raise rates for other customers and impede emission-reduction efforts.
Even if tech corporations balance nuclear-power deals by subsidizing the expansion of renewable energy, analysts believe the end outcome will be increased reliance on natural gas to replace diverted nuclear power. Natural gas-fired plants emit carbon dioxide but, unlike renewables, can offer 24/7 power and are less expensive and easier to develop than new nuclear reactors.
In states such as Connecticut, Maryland, New Jersey, and Pennsylvania, the nuclear-tech marriage is raising concerns about economic development, grid dependability, cost, and climate goals.
Amazon’s agreement in Pennsylvania alarmed Patrick Cicero, the state’s consumer advocate. Cicero expressed concern about costs and reliability if “massive energy consumers kind of get first dibs.” It is uncertain whether the state now has the regulatory authority to intervene in such deals, he said.
“Never before could anyone say to a nuclear power plant, we’ll take all the energy you can give us,” said Cicero.
“To supplement our wind- and solar-energy projects, which depend on weather conditions to generate energy, we’re also exploring innovations and technologies, and investing in other sources of clean, carbon-free energy,” an Amazon spokeswoman said.
A new arrangement
Amazon purchased a data center in Pennsylvania that can collect up to 960 megawatts of electricity, enough to power hundreds of thousands of homes. The acquisition boosted interest in “behind-the-meter” transactions, in which a large customer obtains power directly from a facility.
The relatively recent arrangements allow data centers to be erected years faster because little to no new grid infrastructure is required. Data centers might also avoid transmission and distribution rates, which account for a significant portion of power bills.
The renewed interest in nuclear power is part of a turnaround of fortune for corporations with power facilities in competitive markets. That industry has been challenging for two decades, following overbuilding in the 1990s. Nuclear power stations struggled to compete with wind, solar, and natural gas, prompting a wave of closures.
However, tech businesses willing to pay a premium for practically uninterrupted, carbon-free power might fulfill their climate-change goals while fueling AI.
This year, Vistra, the largest competitive power generator in the United States, has seen its stock price more than double. The business has been in talks with both nuclear and gas plants for behind-the-meter transactions.
“In this case, the customer has come to us and many others in the industry and said, ‘I need as much power as you can make available,'” Vistra CEO Jim Burke explained.
Constellation Energy, which owns 14 nuclear power stations in the United States and generates more than a fifth of the country’s nuclear energy, has seen its stock price climb by more than 70% this year.
Joseph Dominguez, Constellation’s president and CEO, stated that there are still numerous areas with an excess of power, including a stretch from Pennsylvania to Illinois. That leaves room for data centers, he claims.
Contracts with data centers prepared to pay a premium would cover the cost of re-licensing, he added, prolonging plant life by another 20 years and funding enhancements that may increase nuclear power output.
“If we don’t have those things, we’re going to lose the nukes again,” Dominguez told the crowd. “We’re going to go back to where we were.”
Lots of talks, and controversy
It is too early to determine how much power data centers will use. According to the Electric Power Research Institute, estimates range from roughly 4% of total power consumption in the United States last year to between 4.6% and 9% by 2030.
When Connecticut state Sen. Norm Needleman backed economic incentives for data centers a few years ago, he had no intention of pulling existing power off the grid. Then, a developer suggested connecting a data center to the Millstone nuclear facility.
“If we lose a carbon-free resource, what are we going to replace it with?” wondered Needleman, whose measure requiring a review of such projects failed this year.
Daniel O’Keefe, commissioner of Connecticut’s Department of Economic and Community Development, believes the concept has the potential to succeed if implemented thoughtfully. Neighboring states are establishing data centers, and the necessary grid enhancements are shared by all New England customers, so Connecticut should benefit economically, he added.
“Our constituents are paying for these data centers regardless of whether they’re inside Connecticut,” O’Keefe said.
In New Jersey, Public Service Enterprise Group CEO Ralph LaRossa stated that the business has been in discussions with data centers, including direct power sales, which might help New Jersey’s economic development ambitions to establish an AI hub.
Nuclear power reactors, including those controlled by PSEG, account for around 40% of the state’s power.
According to Brian Lipman, director of the New Jersey Division of Rate Counsel, customers in New Jersey have spent around $300 million each year for the past six years to assist in maintaining its facilities operational, in addition to hundreds of millions in the past.
“What happened to that investment?” Lipman inquired.
New Jersey is also aiming for 100% renewable energy output by 2035, which Lipman believes would be impossible without nuclear power. PSEG has declined to respond.
Energy needs
Many of the discussions are taking place within the PJM Interconnection, the regional transmission organization and power market that serves Washington, D.C., and 13 states from Virginia to Illinois. It stated that it would collaborate with both plant and transmission owners and perform analyses to avoid reliability difficulties and other challenges.
Last week, utilities American Electric Power and Exelon requested a hearing at the Federal Energy Regulatory Commission regarding Amazon’s deal in Pennsylvania, arguing that up to $140 million in costs could be shifted 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.
Talen Energy, which developed the data center and operates the nuclear plant, described the request as a “misguided attempt to stifle this innovation.”
It is uncertain if and to what extent data centers placed at nuclear facilities would require grid power. Nuclear facilities are significantly more reliable than other forms of power generation, yet they do suffer outages.
According to persons familiar with the situation, before Amazon purchased the Pennsylvania data center, a Talen nuclear reactor went down last October, forcing the data center site to use grid electricity. The requirement for grid power was unanticipated, and extra system safeguards have been implemented since then to prevent a recurrence, the people added.
Recently, GreatGameIndia reported that the Wyoming Energy Authority awarded BWX Technologies Inc. a multimillion-dollar contract to develop small nuclear reactors to address power grid issues in the Powder River Basin.
