Major U.S. utilities Exelon and American Electric Power (AEP) are objecting to plans by Talen Energy Corporation to supply power to an Amazon Web Services (AWS) data center located next to Talen’s Susquehanna nuclear power plant in northeastern Pennsylvania. The utilities have filed a complaint with the Federal Energy Regulatory Commission (FERC), stating that the proposed Interconnection Service Agreement (ISA) could lead to unfair costs for ratepayers and negatively impact market operations and reliability.
Talen recently sold its Cumulus data center campus in Pennsylvania to AWS for $650 million, along with a long-term agreement to provide power from the Susquehanna Nuclear Power Plant to the data center. The sale is expected to benefit Talen financially, as the company filed for Chapter 11 bankruptcy in 2022 and plans to emerge from bankruptcy in 2023.
The Susquehanna plant, majority-owned and operated by Talen through its subsidiary Susquehanna Nuclear, features two General Electric boiling water reactors that started operating in 1983 and are licensed through 2042 and 2044. The data center campus is directly connected to the plant and has substantial redundant capacity for power supply.
According to Talen Energy’s investor presentation, the company will provide fixed-price nuclear power to the AWS data center as it expands. AWS has minimum power commitments that increase over time, with additional extension options linked to nuclear license renewals.
Exelon and AEP are concerned about the pending service integration agreement that would exempt the data center from paying transmission fees to PJM Interconnection, the regional transmission organization. They argue that co-located data centers should pay their fair share of system usage and other charges, rather than benefitting as “free riders.”
PJM has requested FERC approval for a modified ISA that would allow Talen to sell more power to the data center without affecting the transmission system. Exelon and AEP have raised objections, warning of potential market implications if similar arrangements are pursued by other generators and large consumers.
Talen has defended its agreement with AWS, stating that it aligns with the evolving demands of the energy industry driven by AI and data centers. The company asserts that the ISA has the necessary support from all involved parties, including PPL Utilities, and aims to provide reliable and efficient power supply to meet growing demands.
Overall, the dispute between Talen Energy and the opposing utilities reflects broader tensions in the energy sector regarding the evolving landscape of power generation and consumption, as well as the need to ensure fair and equitable market practices for all stakeholders.
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https://www.neimagazine.com/news/us-power-utilities-challenge-talen-energys-deal-with-amazon-data-centre-at-susquehanna-npp/