As tech companies increasingly seek to directly connect data centers to nuclear plants to secure clean energy for powering artificial intelligence (AI), some utilities are raising concerns about the potential impact on the electric grid. Data centers, which are critical to the functioning of the internet, now require substantial power—sometimes as much as a gigawatt, comparable to the capacity of a typical U.S. nuclear reactor.
Joe Dominguez, CEO of Constellation Energy, emphasized the importance of data centers for U.S. economic competitiveness and national security, particularly in the race against China for AI supremacy. Speaking during Constellation’s second-quarter earnings call, Dominguez stated that connecting data centers directly to nuclear power plants—referred to as co-location—offers the fastest and most cost-effective solution to support data center growth without burdening consumers with the cost of new transmission lines.
However, the co-location of data centers and nuclear plants has sparked controversy. Amazon Web Services’ (AWS) recent acquisition of a data center powered by the Susquehanna nuclear plant in Pennsylvania has faced opposition from utilities like American Electric Power (AEP) and Exelon. These utilities have filed complaints with the Federal Energy Regulatory Commission (FERC), arguing that such deals could reduce the availability of power in the PJM grid area and harm existing customers.
Despite these objections, Talen Energy, which sold the data center to AWS, has defended the arrangement, stating that it addresses the evolving power demands driven by AI and data centers. The company has accused the utilities of stifling innovation.
FERC has requested additional information on the AWS-Talen service agreement and plans to hold a conference in the fall to discuss the broader implications of connecting large electricity loads directly to power plants. Constellation and Vistra, another energy company, have expressed support for the AWS-Talen agreement, noting that both co-location and traditional grid connections will be necessary to meet growing power demands.
Kathleen Barron, Constellation’s Chief Strategy Officer, highlighted the interest from various tech companies in co-locating data centers at nuclear sites. Vistra CEO Jim Burke also reported ongoing discussions with potential customers about co-location opportunities.
As the debate continues in the PJM region, data center developers may increasingly consider alternatives like Texas, which operates its own grid known as ERCOT. Vistra has already seen interest in co-locating data centers at its Comanche Peak nuclear plant in Texas.
Industry leaders, including Dominion Energy and Holtec International, are exploring similar opportunities, but caution that balancing the power needs of data centers with those of consumers will be crucial as the U.S. navigates these emerging energy challenges.
