AWS’ nuclear-powered data center deal just hit a major roadblock

US energy company Talen Energy has requested US regulators reject a challenge to its recent AWS data center deal, after a number of electricity providers called for the project to be scrapped.

The group opposing the deal includes a number of major utility companies such as American Electric Power (AEP) and Exelo, who claimed the deal will result in higher power bills for taxpayers or issues with grid availability.

In its filing with the Federal Energy Regulatory Commission (FERC) defending the deal, Talen hit back at the utility consortiums’ claims.

"It is an unlawful attempt to hijack this limited interconnection service agreement amendment proceeding that they have no stake in and turn it into an ad hoc national referendum on the future of data center load,” Talen said.

In March 2024, AWS announced it had acquired Talen Energy’s data center campus, located next to the 2.5 gigawatt Susquehanna nuclear power station in Pennsylvania, in a $650 million deal.

This is a continuation of a wave of hyperscaler investment to bolster data center infrastructure in response to steep energy demands brought about by the emergence of generative AI.

The 1,200-acre campus will leverage the power generated at the neighboring site, with Amazon targeting a 960 MW data center campus, according to Talen, as well as two 10-year extension options that will be dependent on nuclear license renewals.

The deal would also see Talen supply AWS with energy in a 10-year Power Purchase Agreement (PPA) from the Susquehanna site.

War of words intensifies as AWS and Talen push on with plans 

The group of utilities called on the FERC to reject the deal outright, or at least schedule a hearing to scrutinize the agreement more closely, which they claimed could result in a $140 million increase in energy costs for citizens each year.

The group said not only would citizens be burdened with paying for the project, but ordinary ratepayers would not see any dividends from the project.

In response, Talen has shot back in its statement imploring the FERC to ignore the consortium’s request, noting that the deal has support from “all impacted parties – which neither Exelon and AEP decidedly are not.”

“The factual recitations in the protest are demonstrably false. The legal positions are demonstrably infirm. And nearly all the issues raised by Exelon and AEP are not subject to FERC oversight, because transmission is not implicated,” it stated.

The energy company argued that if the regulator allows the hearing to take place it will stifle data center expansion and deter the construction of power plants in the future.

This, according to Talen, would come at a bad time for the US energy market, due to the unprecedented demand for electricity the nation is currently experiencing.

The FERC is yet to provide an official decision on whether or not it plans on scheduling a hearing, when this might be, or if it will be rejecting the agreement altogether.