{"id":5071,"date":"2025-01-28T08:00:00","date_gmt":"2025-01-28T07:00:00","guid":{"rendered":"https:\/\/natixis.ezine.intercountry.com\/?p=5071"},"modified":"2025-01-27T15:37:08","modified_gmt":"2025-01-27T14:37:08","slug":"big-tech-wants-to-plug-data-centers-right-into-power-plants-utilities-say-its-not-fair","status":"publish","type":"post","link":"https:\/\/natixis.ezine.intercountry.com\/index.php\/2025\/01\/28\/big-tech-wants-to-plug-data-centers-right-into-power-plants-utilities-say-its-not-fair\/","title":{"rendered":"Big Tech wants to plug data centers right into power plants. Utilities say it’s not fair"},"content":{"rendered":"\n

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A data center owned by Amazon Web Services, front right, is under construction next to the Susquehanna nuclear power plant in Berwick, Pa., on Tuesday, Jan. 14, 2024. (AP Photo\/Ted Shaffrey)<\/sub><\/figcaption><\/figure><\/div>\n\n\n

By MARC LEVY<\/span> Associated Press<\/p>\n

HARRISBURG, Pa. (AP) \u2014 Looking for a quick fix for their fast-growing electricity diets, tech giants are increasingly looking to strike deals with power plant owners to plug in directly, avoiding a potentially longer and more expensive process of hooking into a fraying electric grid<\/span> that serves everyone else.<\/p>\n

It’s raising questions over whether diverting power to higher-paying customers will leave enough for others and whether it’s fair<\/span> to excuse big power users from paying for the grid<\/span>. Federal regulators are trying to figure out<\/span> what to do about it, and quickly.<\/p>\n

Front and center is the data center that Amazon’s cloud computing subsidiary, Amazon Web Services, is building next to the Susquehanna nuclear plant in eastern Pennsylvania.<\/p>\n

The arrangement between the plant’s owners and AWS \u2014 called a “behind the meter” connection \u2014 is the first such to come before the Federal Energy Regulatory Commission. For now, FERC has rejected a deal that could eventually send 960 megawatts \u2014 about 40% of the plant’s capacity \u2014 to the data center. That’s enough to power more than a half-million homes.<\/p>\n

That leaves the deal and others that likely would follow in limbo. It’s not clear when FERC, which blocked the deal on a procedural ground, will take up the matter<\/span> again or how the change in presidential administrations might affect things.<\/p>\n

“The companies, they’re very frustrated because they have a business opportunity now that’s really big,” said Bill Green, the director of the MIT Energy Initiative. “And if they’re delayed five years in the queue, for example \u2014 I don’t know if it would be five years, but years anyway \u2014 they might completely miss the business opportunity.”<\/p>\n

What’s driving demand for energy-hungry data centers<\/strong><\/p>\n

The rapid growth of cloud computing and artificial intelligence has fueled demand for data centers that need power to run servers, storage<\/span> systems, networking equipment and cooling systems.<\/p>\n

That’s spurred proposals to bring nuclear power plants out of retirement, develop small modular nuclear reactors and build utility-scale renewable installations or new natural gas plants. In December, California-based Oklo announced an agreement to provide 12 gigawatts to data center developer Switch from small nuclear reactors powered by nuclear waste.<\/p>\n

Federal officials say fast development of data centers is vital to the economy and national security, including to keep pace with China in the artificial intelligence race.<\/p>\n

For AWS, the deal with Susquehanna satisfies its need for reliable power that meets its internal requirements for sources that don’t emit planet-warming greenhouse gases, like coal, oil or gas-fueled plants.<\/p>\n

Big Tech also wants to stand up their centers fast. But tech’s voracious appetite for energy comes at a time when the power supply is already strained<\/span> by efforts to shift<\/span> away from planet-warming fossil fuels.<\/p>\n

They can build data centers in a couple years, said Aaron Tinjum of the Data Center Coalition. But in some areas, getting connected to the congested electricity grid<\/span> can take four years, and sometimes much more, he said.<\/p>\n

Plugging directly into a power plant would take years off their development timelines.<\/p>\n

What’s in it for power providers<\/strong><\/p>\n

In theory, the AWS deal would let Susquehanna sell power for more than they get by selling into the grid<\/span>. Talen Energy, Susquehanna’s majority owner, projected the deal would bring as much as $140 million in electricity sales in 2028, though it didn’t disclose<\/span> exactly how much AWS will pay for the power.<\/p>\n

The profit potential is one that other nuclear plant operators, in particular, are embracing after years of financial distress and frustration with how they are paid in the broader<\/span> electricity markets. Many say they have been forced to compete in some markets against a flood of cheap natural gas as well as state-subsidized solar and wind energy.<\/p>\n

Power plant owners also say the arrangement benefits the wider public, by bypassing the costly buildout of long power lines and leaving more transmission capacity on the grid<\/span> for everyone else.<\/p>\n

FERC’s big decision<\/strong><\/p>\n

A favorable ruling from FERC could open the door to many more huge data centers and other massive power users like hydrogen plants and bitcoin miners, analysts say.<\/p>\n

FERC’s 2-1 rejection in November was procedural. Recent comments by commissioners suggest they weren’t ready to decide how to regulate such a novel matter<\/span> without more study.<\/p>\n

In the meantime, the agency is hearing arguments for and against the Susquehanna-AWS deal.<\/p>\n

Monitoring Analytics, the market watchdog in the mid-Atlantic grid<\/span>, wrote in a filing to FERC that the impact would be “extreme” if the Susquehanna-AWS model were extended to all nuclear power plants in the territory.<\/p>\n

Energy prices would increase significantly and there’s no explanation for how rising demand for power will be met even before big power plants drop<\/span> out of the supply mix, it said.<\/p>\n

Separately, two electric utility owners \u2014 which make money in deregulated states from building out the grid<\/span> and delivering power \u2014 have protested that the Susquehanna-AWS arrangement amounts to freeloading off a grid<\/span> that ordinary customers pay to build and maintain. Chicago-based Exelon and Columbus, Ohio-based American Electric Power say the Susquehanna-AWS arrangement would allow AWS to avoid $140 million a year that it would otherwise owe.<\/p>\n

Susquehanna’s owners say the data center won’t be on the grid<\/span> and question why it should have to pay to maintain it. But critics contend that the power plant itself is benefiting from taxpayer subsidies and ratepayer-subsidized services, and shouldn’t be able to strike deals with private customers that could increase costs for others.<\/p>\n

FERC’s decision will have “massive repercussions for the entire country” because it will set a precedent for how FERC and grid<\/span> operators will handle the waiting avalanche of similar requests from data center companies and nuclear plants, said Jackson Morris of the Natural Resources Defense Council.<\/p>\n

Stacey Burbure, a vice president for American Electric Power, told FERC at a hearing in November that it needs to move quickly.<\/p>\n

“The timing of this issue is before us,” she said, “and if we take our typical five years to get this perfect, it will be too late.”<\/p>\n

___<\/p>\n

Follow Marc Levy<\/span> on X at: https:\/\/x.com\/timelywriter.<\/p>\n

___<\/p>\n

The Associated Press’ climate and environmental coverage receives financial support from multiple private foundations. AP is solely responsible for all content. Find AP’s standards for working with philanthropies, a list of supporters and funded coverage areas at AP.org.<\/p>