Tech giants seek direct power plant deals, bypassing traditional grid

Tech giants are seeking direct power supply deals with power plants to meet their growing electricity needs, bypassing the traditional grid system.

This trend is exemplified by Amazon Web Services’ proposed arrangement with Pennsylvania’s Susquehanna nuclear plant, which would divert 960 megawatts — enough to power more than 500,000 homes — directly to a new data center.

The Federal Energy Regulatory Commission (FERC) has temporarily blocked this “behind the meter” connection, the first of its kind to come before the commission, raising significant questions about grid fairness and energy accessibility. The decision’s implications extend beyond AWS, potentially affecting the entire data center industry and nuclear power sector.

The surge in cloud computing and artificial intelligence is driving unprecedented demand for data center power. While data centers can be constructed within two years, grid connection often takes four years or more. Direct power plant connections could significantly reduce these timelines, making them attractive to tech companies racing to expand their operations.

Critics, including electric utility owners Exelon and American Electric Power, argue these arrangements could amount to grid freeloading, potentially allowing AWS to avoid $140 million in annual grid maintenance costs. Market watchdog Monitoring Analytics warns of “extreme” impacts if this model extends to all nuclear plants in the mid-Atlantic grid.

Supporters counter that these arrangements could benefit nuclear plants struggling with market competition from natural gas and renewable energy, while reducing the need for new transmission infrastructure. Talen Energy, Susquehanna’s majority owner, projects significant revenue potential from the AWS deal.

Read more: Big Tech wants to plug data centers into power plants, utilities say it’s not fair