Amazon wants more nuclear power, but regulators fear spike in consumer costs

Federal regulators recently denied Amazon’s request for additional nuclear power to support its expanding data center operations. The Federal Energy Regulatory Commission (FERC) ruled 2-1 against the proposal, citing concerns that granting tech companies greater access to nuclear energy could drive up consumer costs and strain grid reliability.

In addition to Amazon, other tech giants, such as Meta and Microsoft, have increasingly explored running their energy-intensive data centers with nuclear power. Unlike other renewable sources, nuclear energy offers a continuous flow of electricity, making it attractive to companies that are pledging to reduce their carbon footprints while maintaining consistent power supplies for the ever-growing demands of data centers.

However, the FERC decision represents a new hurdle for the industry’s broader ambitions in nuclear energy adoption.

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Amazon’s nuclear power proposal followed its March $650 million acquisition of a Pennsylvania data center campus from Talen Energy, a major U.S. energy provider.

The facility is powered by Talen Energy’s adjacent nuclear plant, and Amazon had sought regulatory approval to increase its electrical draw from the facility, but the FERC concluded that allowing the tech giant’s plan to move forward could lead to energy price hikes and threaten overall grid stability.

“Arrangements of the type presented here present an array of complicated, nuanced and multifaceted issues, which collectively could have huge ramifications for both grid reliability and consumer costs,” Mark Christie, a Republican FERC commissioner, wrote in a concurring statement.

In a dissenting opinion, the lone commissioner that voted to support Amazon’s proposal, Democratic chair Willie Phillips, argued that partnerships between nuclear plants and data centers are essential for the energy transition, asserting that blocking these arrangements could negatively impact both energy reliability and national security.

“I respectfully dissent from today’s order because it is a step backward for both electric reliability and national security,” Phillips wrote. “In failing to accept the agreement, we are rejecting protections that the interconnected transmission owner says will enhance reliability while also creating unnecessary roadblocks to an industry that is necessary for our national security.”

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Analysts suggest that the decision may deter similar deals between nuclear providers and data center operators, potentially affecting future investments in nuclear energy. The ruling appears to have impacted investor confidence in this energy source, as this week saw a dip in stocks among nuclear power providers, signaling a market response to the potential regulatory challenges ahead.

Despite the setback, Amazon and Talen Energy will proceed with the initial phases of the data center campus, using the nuclear power already available. Both companies have expressed their intent to continue seeking regulatory approval for expanded power use.