U.S. Regulators Reject Amazon's Data Center Proposal for Direct Nuclear Connection

Key Takeaways

The Federal Energy Regulatory Commission (FERC) denied Amazon’s data center proposal due to concerns over grid reliability and potential cost increases for consumers.

Amazon aimed to connect its data center to Talen Energy’s nuclear facility in Susquehanna, PA.

FERC’s decision wasn’t unanimous, with the agency’s chairman calling it a "step backward."

In a move that’s stirring up debate, U.S. energy regulators have blocked Amazon’s proposal to connect a data center directly to a nuclear power plant in Pennsylvania. The Federal Energy Regulatory Commission (FERC) recently shot down an amended agreement that would have linked Amazon’s facility to Talen Energy’s Susquehanna nuclear plant. This decision came with strong concerns about how the project could drive up consumer costs and disrupt the stability of the local power grid.

According to reports, FERC members believe that adding such a large data center to the Talen site would put extra pressure on resources meant for the regional grid. In their view, this diversion could raise electricity bills for everyday people while creating reliability risks. The stakes are high, as companies like Amazon face the challenge of finding reliable power for the immense energy demands of AI technology. For tech giants, setting up data centers at power plants seems like a quick fix, but as this case shows, it’s not always a guaranteed solution.

The FERC decision wasn’t without controversy. Commissioner Mark Christie voiced concerns about the “complex issues” that co-location of a data center with a power plant can bring, especially when it comes to the impact on the grid and the potential increase in consumer costs. There was also confusion over how distribution upgrades—necessary for this kind of interconnection—would be paid for.

Adding to the tension, the FERC decision was split. Chairman Willie Phillips didn’t hold back his disappointment, calling the rejection a “step backward.” He worries that blocking this connection could dampen the U.S.’s competitive edge in the global AI space and even impact national security. In his words, this decision could hold back efforts to secure the energy reliability that large-scale AI operations need.

This situation underscores the delicate balance between expanding tech infrastructure and managing public resources responsibly. For now, Amazon’s path to reliable nuclear power for its data center remains uncertain.