Why tech companies are buying nuclear power for data centers

Technology companies are increasingly looking to connect data centers directly to nuclear power plants as they compete for clean energy to power artificial intelligence, sparking pushback from some utilities over the potential impact on the grid.

Data centers, the computer warehouses that run the Internet, now require gigawatts or more of power in some cases, equivalent to the average capacity of a U.S. nuclear reactor

Data centers are critical to U.S. economic competitiveness and national security as the United States competes with rivals such as China for supremacy in the race to develop artificial intelligence. Constellation Energyoperates the largest nuclear fleet in the United States

“When you talk about big [demand] “If you want to use zero-emission energy for the load, you need to build it very close to the nuclear power plant,” Dominquez said on Constellation’s second-quarter earnings call on Tuesday. Constellation, which is headquartered in Baltimore and operates 93 reactors, 21 seats.

Constellation shares have soared 58% this year, ranking sixth in the S&P 500, as investors place higher value on the company’s nuclear power capacity to feed data center growth. shares Vistra Corporation., based outside Dallas and owner of six reactors, has doubled its share price this year and is the second-best performer on the S&P Index behind the maker of artificial intelligence chips. NVIDIA.

Technology companies are building data centers at a time when electricity supplies are increasingly constrained by the retirement of coal-fired power plants and rising demand from expanding domestic manufacturing and the electrification of vehicles.

PJM Interconnection, the largest power grid operator in the United States, warned in late July that power supply and demand were tightening as the construction of new generation power generation lagged behind demand. PJM covers 13 states primarily in the mid-Atlantic region, including the world’s largest data center in northern Virginia.

Constellation’s Dominguez believes that connecting data centers directly to nuclear power plants (known in the industry as “colocation”) is the fastest and most cost-effective way to support data center expansion without requiring consumers to build new transmission lines. cost burden.

“Frankly, the idea that you could accumulate enough electricity somewhere on the grid to power a gigawatt data center is laughable to me — you can do it anywhere that doesn’t require a few seconds,” Dominquez said. “It’s a huge force that requires us to go out and focus. “

But placing the data center next to a nuclear power plant has faced controversy.

March, Amazon Web Services purchases a data center from Pennsylvania powered by 41-year-old Susquehanna nuclear power plant conversation energy $650 million. But an agreement to sell power from nuclear power plants directly to AWS data centers has faced opposition from utility companies American Electric Power Company and Exelonthey have 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 result in less power available in the PJM grid area as resources “flee to serve loads that use and benefit from the transmission system but do not pay for it.”

“This will harm existing customers,” the utility told FERC in a June filing. Talen Energy dismissed the objections as “clearly wrong” and accused the utility of stifling innovation.

“The rapid emergence of artificial intelligence and data centers is fundamentally changing electricity demand and leading to an inflection point in the power industry,” Talen said in a statement in June. “Talen’s hosting arrangement with AWS brings the power to this new demand Here comes a solution that provides fast service to customers in a short time. ”

FERC has requested more information about the service agreement between Talen and AWS. Regulators will meet in the autumn to discuss issues related to connecting large electrical loads directly to power plants.

“This is really a great opportunity for interaction between stakeholders and commissioners in informal settings like meetings, rather than Interaction in proceedings.

Constellation and Vistra endorsed the AWS-Talen agreement in filings with FERC, and the CEOs of both companies said on earnings calls this week that colocation and traditional grid connections are needed to meet demand.

Barron told CNBC that Constellation is “seeing a lot” of interest from technology companies in setting up a data center at one of its sites.

Vistra CEO Jim Burke said Thursday that Vistra is having multiple conversations with customers about hosting issues and is “conducting due diligence on multiple sites.” Burke said that with the controversy over colocation in the PJM region, data center developers may take a hard look at Texas, which operates its own power grid called ERCOT.

“We’re seeing some interest in Comanche Peak,” Burke told analysts on the company’s second-quarter earnings call, referring to a nuclear power plant in Vistra. Comanche Peak, located 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 normal conditions and 480,000 during peak times, according to Vistra Household power supply.

and Dominion Energy has expressed a willingness to connect the data center to the Millstone Nuclear Power Plant in Connecticut. Dominion’s service area includes northern Virginia, the center of the data center boom.

“We will continue to explore this option,” Dominion Chief Executive Robert Blue said on the second-quarter earnings call. “We do have a clear understanding that any custody option must be favorable to us, our potential counterparties in Connecticut and Stakeholders make sense.”

Kelly Trice, president of Florida-based private nuclear power company Holtec International, said the United States needs to start thinking more about balancing the power needs of data centers with the power needs of all consumers. Holtec is working to restart the Palisades nuclear power plant in Michigan and has had conversations with technology companies about nuclear power.

“Essentially, hyperscalers and data centers can grab all the power, and if we’re not careful, consumers don’t get any power,” Trice told CNBC. “So the balance of the consumer really getting what they deserve is a factor.”

“America hasn’t really started wrestling yet. [with] “Not yet,” Trice said.