A cooling tower at the Nine Mile Point Constellation Nuclear Station in Scriba, New York, USA, Tuesday, May 9, 2023.
Lauren Petracca Bloomberg Getty Images
Tech companies are increasingly looking to connect data centers to nuclear plants as they race to secure clean energy to power artificial intelligence, prompting resistance from some utilities over the potential impact on the power grid.
Data centers, warehouses of computers that run the Internet, in some cases now require a gigawatt of power or more, compared to the capacity of an average nuclear reactor in the US.
The data center is important to the competitiveness of the US economy and national security as the country competes with adversaries such as China for supremacy in the race to develop AI, said Joe Dominguez, CEO of Constellation Energywhich operates the largest nuclear fleet in the US
“If you’re talking about large loads (unless) that also want to use zero-emissions energy, you’re going to get closer to nuclear power plants,” Dominguez said on Constellation’s second-quarter earnings call Tuesday. Constellation, headquartered in Baltimore, operates 21 of the 93 reactors in the US.
Shares of Constellation have risen 58% this year, the sixth-best performing stock in the S&P 500, as investors place a higher value on the company’s nuclear power capacity to meet growth in data centers. Share from Vistra Corp., based outside Dallas and owner of six reactors, has doubled this year, the second-best performing stock in the S&P after the AI ​​chipmaker. Nvidia.
Tech companies are building data centers as electricity supplies increase due to the retirement of coal plants and as demand increases from the expansion of domestic manufacturing and the electrification of vehicles.
The largest grid operator in the US, PJM Interconnection, warned in late July that resources and demand are tightening as the construction of new generation lags demand. PJM includes 13 states primarily in the Mid-Atlantic region, including the world’s largest data center in northern Virginia.
Constellation’s Dominguez said that connecting data centers directly to nuclear plants, called co-location by the industry, is the fastest and most effective way to support the construction of data centers, without burdening consumers with the cost of building new transmission lines.
“The idea that you can accumulate enough power anywhere on the grid to power a gigawatt data center really fascinates me — you can do it anywhere that hasn’t started in decades,” Dominguez said. “That’s a huge amount of power to go out and try to concentrate.”
Amazon nuclear deal
But co-locating data centers next to nuclear plants has faced controversy.
In March, Amazon Web Services bought a data center powered by the 41-year-old Susquehanna nuclear plant in Pennsylvania from Talen Energy for $650 million. But the agreement to directly sell power to AWS data centers from nuclear plants has faced opposition from utilities. American Electric Power and Exelonwho has filed a complaint with the Federal Energy Regulatory Commission (FERC).
AEP and Exelon argue that the deal between Amazon and Talen sets a precedent that will lead to less power being available in the PJM grid area as resources “scramble to serve the load that uses and benefits from – but does not pay for – the transmission system”
“This will harm our existing customers,” the utility told FERC in a June filing. Talen Energy dismissed the argument as “false evidence,” suing the utility for stifling innovation.
“The rapid emergence of artificial intelligence and data centers has fundamentally changed the demand for power and led to an inflection point for the power industry,” Talen said in a June statement. “The Talen co-location arrangement with AWS brings one solution to this new demand, in a timeline that serves the customer quickly.”
FERC has requested more information about the service agreement between Talen and AWS. Regulators held a conference in the fall to discuss issues related to connecting large electrical loads directly to power plants.
“It’s really a good opportunity to have an interaction between stakeholders and commissioners in an informal setting like a conference, instead of doing it in court,” said Kathleen Barrón, chief strategy officer at Constellation, about the power company’s new income. call, referring to the fall FERC meeting.
Shopping for nuclear power
Constellation and Vistra have supported the AWS-Talen agreement in filings with FERC, with each CEO saying in an earnings call this week that co-location and traditional grid connections will be needed to meet demand.
Barrón told CNBC that Constellation has “seen interest from a lot” of tech companies that could locate a data center at one of its sites.
Vistra is having multiple conversations with customers about co-location and is “in due diligence for multiple sites,” CEO Jim Burke said Friday. With disputes in the PJM region over co-location, data center developers could look to Texas, which operates its own grid called ERCOT, Burke said.
“We’re seeing some interest in Comanche Peak,” Burke told analysts on the company’s second-quarter earnings call, referring to one of Vistra’s nuclear plants. Comanche Peak, about 50 miles outside Fort Worth, Texas, has two reactors with a capacity of 2.4 gigawatts, enough to power 1.2 million homes under typical conditions and 480,000 homes during peak times, according to Vistra.
and Dominion Energy has indicated that it is open to connect the data center for the Millstone nuclear plant in Connecticut. Dominion’s service area includes northern Virginia, the center of the data center boom.
“We continue to explore those options,” CEO Robert Blue said on Dominion’s second-quarter earnings call. “We clearly understand that the co-location option must make sense for us, our potential partners and our Connecticut stakeholders.”
Kelly Trice, president of Holtec International, a private nuclear company headquartered in Florida, said the U.S. needs to think more about balancing data center power needs with all consumers. Holtec is working to restart the Palisades nuclear plant in Michigan and has also been in talks with technology companies about nuclear energy.
“Essentially, hyperscalers and data centers can take all the power and consumers get nothing if they’re not careful,” Trice told CNBC. “So the balance there, where the consumer actually gets what’s right, is also a factor.”
“The United States hasn’t started wrestling (with),” Trice said. “But I think we’re close.”
