Amazon’s nuclear datacenter dreams stall as watchdog rejects power deal

Federal Energy Regulatory Commission cites grid stability concerns

The Register, Dan Robinson, Mon 4 Nov 2024

Amazon has hit a roadblock in its plans for nuclear-powered US datacenters. Federal regulators rejected a deal that would let it draw more power from a Susquehanna plant to supply new bit barns next to the site, on the grounds this would set a precedent which may affect grid reliability and increase energy costs.

The Federal Energy Regulatory Commission (FERC) issued an order on November 1 rejecting an amended Interconnection Service Agreement (ISA) that would have increased the amount of co-located load from 300 to 480 MW, and to “make revisions related to the treatment of this co-located load.”

Co-located load means the Cumulus datacenter complex that Talen Energy built next to the 2.5 GW Susquehanna nuclear plant in Pennsylvania which it operates, and which Amazon acquired in March via a deal worth $650 million.

The online megamart announced plans in May to expand the site with more than a dozen new datacenters for its Amazon Web Services (AWS) cloud subsidiary over the next decade.

Soon after that, official objections were filed by two utility companies, American Electric Power (AEP) and Exelon. They argued that the revised agreement between Talen and PJM Interconnection, the regional power grid operator, would give the Cumulus site preferential treatment and may result in less energy going to the grid in some circumstances.

Exelon and AEP also argued that the amended ISA should be subject to an official hearing because “it raises many factual questions,” and, in the absence of any such hearing, that FERC should reject the amended ISA. It seems a majority of the commissioners agreed.

Specifically, Exelon and AEP said the amended ISA had not been adequately supported, meaning no good reason was given as to why the amendments were necessary………………………………………………………………………………………………………………..

The move highlights the difficulties datacenter operators face in expanding their facilities to keep pace with the booming demand for training and operating the latest AI models, and the challenges that power companies face in delivering the energy required.

As The Register has covered recently, access to enough power has become a major issue in building or expanding those bit barns, with one major commercial property developer in the UK citing this as the single biggest constraint it faces.

Yet according to Bloomberg, the hyperscalers – Amazon, Alphabet, Meta, and Microsoft – are set to collectively splash out well over $200 billion this year chasing the AI dragon, despite increasing warnings the AI market is a bubble set to burst and many investors and enterprises are not seeing much return for all the cash they are throwing at it.

Amazon itself said in its recent earnings report it expects to spend $75 billion on capex this year and even more in 2025, largely due to rising demand for AWS services related to generative AI.

We asked the company to comment on the rejected Susquehanna power proposal.

The company has also recently pursued small modular reactors (SMRs) via a $500 million investment into three projects to develop these miniature nuclear plants. https://www.theregister.com/2024/11/04/aws_nuclear_datacenter_ferc/