HARRISBURG, Pa. (AP) - In pursuit of quick fixes to their soaring energy demands, tech firms are striking deals with power plant operators for direct connections — a route that circumvents the slower and pricier option of tying into an aging electric grid serving the public.
Worries are rising about the possible effect of changing flow to buyers who shell out more, especially if enough supplies will stay for others and if it’s fair to free big power users from helping pay for the system. Federal bosses are hurrying to find a fix for this problem.
At the forefront is a data center being built by Amazon's cloud computing division, Amazon Web Services, next to the Susquehanna nuclear facility in eastern Pennsylvania.
The owners of the plant and AWS agreed what is known as a "behind the meter" connection, which is the first of its kind to be presented to the Federal Energy Regulatory Commission. FERC has already denied a proposal that could eventually send 960 megawatts—close to 40% of the total capacity of the plant—to the data center; enough power for more than half a million homes.
This throws the deal—and maybe others—into doubt. It’s not clear when FERC, which had paused the deal because of some paperwork problems, will look at it again or how changing who’s in charge might affect what happens next.
The firms are very much aggrieved, as they have a big chance to do business now. If they get delayed in the line for years—though I can't say it would be five years specifically—they could lose this chance altogether.
On Tuesday, January 14, 2024, . A data center being built by Amazon Web Services is located in the front right area ,adjacent to the Susquehanna nuclear power plant in Berwick, Pennsylvania. (AP Photo/Ted Shaffrey)
The rapid growth of cloud computing and artificial intelligence has raised demand for data centers that need energy to power servers, storage devices, networking tools, and cooling systems.
This has led to proposals to bring back retired nuclear power plants, build small modular nuclear reactors, or construct large-scale renewable energy facilities or new natural gas plants. A California company, Oklo, in December announced a deal to provide 12 gigawatts to the data center developer Switch using small nuclear reactors; the fuel for those reactors will come from nuclear waste.
Government officials say that the fast rise of data warehouses is important for o͏ur economy and safety especially to help us compete with China in the area of smart machines.
The deal with Susquehanna gives AWS a steady power source that matches its rules for energy which doesn’t create greenhouse gases unlike coal oil or natural gas plants.
Big Tech wants to rapidly set up their hubs. But, the demand for energy by the industry meets a power supply already under strain from efforts aimed at reducing global warming by compromising less on fossil fuels.
Build data centers, and you can have it done in a couple of years said Aaron Tinjum of the Data Center Coalition. He also pointed out that accessing the already burdened electricity grid in some areas might take four years or more.
Direct access to a generating station could reduce their development timelines by several years.
The AWS agreement is expected to allow Susquehanna to sell electricity at a higher rate than what they receive from sales to the grid. Talen Energy, which owns the majority stake in Susquehanna, estimated that the agreement could generate as much as $140 million in electricity sales by 2028, though they did not disclose how much AWS will pay for the power.
Nuclear plant operators are greeting the prospect of earning with in in in after having faced years of losses and feeling poorly paid in the larger electricity markets. Many operators say they had to compete in some markets against an overabundance of cheap natural gas, plus solar and wind energy that get state subsidies.
Power plant owners say this setup benefits everyone because it keeps costly building long power lines away and also allows greater transmission capacity on the grid for all users.
Analysts believe a good decision from FERC might open doors for many big data centers and other major power users like hydrogen facilities and bitcoin mining operations.
The FERC rejection was month-to-month, 2-1 , shows that they waded into how to regulate this unprecedented issue but not ready yet to do it without more investigation as per their recent remarks
The agency is considering arguments for and against the Susquehanna-AWS agreement.
In a submission to FERC, Monitoring Analytics, the regulatory authority for the mid-Atlantic grid, said that the consequences would be "severe" if the Susquehanna-AWS model were applied to all nuclear facilities in the region.
The report said energy prices are expected to rise considerably and does not clarify how the growing demand for electricity will be addressed, especially before major power plants are removed from the supply equation.
Two owners of electric utilities — companies that profit from expanding the grid and providing power in deregulated states — have concerns about the Susquehanna-AWS agreement. This, they say, gives an unfair advantage to AWS by allowing it to take benefit from a grid funded by regular customers, which it does not have to help maintain. Exelon, out of Chicago, and American Electric Power from Columbus, Ohio, argue that the Susquehanna-AWS deal will let AWS avoid $140 million a year in costs that it would otherwise have to pay.
The owners of Susquehanna say that the data center will not depend on the grid and they question why they should pay to maintain it. Opponents say the power plant is making money on subsidies paid for by taxpayers and services subsidized by ratepayers; it should not have the ability to enter into contracts with private clients that raise costs for others.
Stacey Burbure, American Electric Power's vice president, echoed the call for prompt action during a hearing in November. "It must be done right now," she told FERC.
"We are having this problem now," she said. "And if we take our normal five years to fix it, it will be too late."
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The Susquehanna nuclear power plant runs in Berwick, Pennsylvania, on Tuesday, January 14, 2024. (Photo by Ted Shaffrey for AP)
The Susquehanna nuclear power plant is in operation located in Berwick, Pennsylvania on Tuesday, January 14, 2024. (AP Photo/Ted Shaffrey)
