Amazon, Meta: Setback for AI power directly from the nuclear power plant
AI data centers need huge amounts of electricity. Why not connect them directly to nuclear power plants? The devil is in the detail.
Susquehanna Steam Electric Station
(Image: Jakec CC BY-SA 4.0)
Data centers for artificial intelligence are incredibly power-hungry. So power-hungry that equipment such as transformers, switches and generators for new data centers have become scarce. Tech companies such as Amazon.com, Google, Meta Platforms and Microsoft are therefore looking to connect directly to nuclear power plants (NPPs) in the USA. This is easier said than done.
This is because withdrawing significant capacity from the public power grid requires special permits in the USA, which are not so easy to obtain. In addition, nature conservation can also get in the way, as Meta CEO Mark Zuckerberg found out.
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According to the Financial Times, Meta wanted to build a new data center next to an (unnamed) US nuclear power plant. However, the site is home to a rare species of bee. This would have imposed conditions on the construction, which is why Meta is now looking for another location. But the bees are not the only reason. Meta is facing the same problem that caused an Amazon project to fail for the time being: electricity grids are not free. A significant proportion of the total price of electricity is the pro rata grid costs.
The data companies hope to be able to save on grid costs by connecting directly to nuclear power plants. Their argument: "We don't use the transmission grid at all, so we don't have to pay the regulated tariffs." Because this increases the costs for all other electricity consumers and can jeopardize the reliability of supply, such a construction requires an exemption. This is only granted if it serves the reliability of the electricity supply or is necessary due to new legal problems or other "unique factors".
Amazon fails with expansion
In fact, Amazon.com already received such an exemption in 2015. A data center at the Susquehanna nuclear power plant in Pennsylvania was allowed to directly purchase 300 of a total of 2520 megawatts of capacity. But now Amazon wanted to expand this to 960 MW and extend the necessary short transmission line at its own expense. 960 MW is more than 45 percent of Berlin's total distribution capacity – modest, compared to other AI projects. OpenAI wants to distribute several 5-gigawatt data centers across the US.
The grid operator responsible in Pennsylvania, PJM Interconnection, saw Amazon's plans as a threat to the public power supply. The company has no objection to Amazon building a transmission facility for 960 MW, but as long as no additional power plants are connected to the grid, PJM believes that Amazon should purchase a maximum of half the capacity, i.e. 480 MW. PJM therefore applied to the responsible authority FERC (Federal Energy Regulatory Commission) for an increase from 300 to 480 MW.
The authority rejected this application on Friday. Removing even more power plant capacity from the public grid does not increase the stability of the power grid. And PJM had not explained what special legal problems or other unique factors should justify Amazon being allowed to purchase its electricity by bypassing the public grid. Rather, the proceedings showed that other data center operators have the same desire as Amazon – so there can be no question of uniqueness.
Without a public network?
Following the announcement of the decision, the share prices of several US power plant operators fell significantly; shares in Constellation Energy even fell by a good ten percent.
Incidentally, it is questionable whether the argument "we don't use the transmission grid" is valid. Other parties to the proceedings have argued that this is not even possible. On the one hand, the nuclear power plant itself requires a connection to the power grid in order to function at all. It would be impossible to start up without an external power supply.
On the other hand, the power requirements of the data center are not exactly constant. Therefore, the power supply must also be flexible, which the nuclear power plant cannot provide. This is only possible with the help of other power sources and therefore the transmission grid.
After all, the existing exemption permit already obliges Amazon to stop purchasing electricity if the nuclear power plant fails. However, the data company did not adhere to this and instead drew power from the public grid.
Solution: build it yourself
The solution for the power-hungry AI data centers is simple, at least from a regulatory perspective: Instead of diverting capacity from existing power plants, data corporations and their partners must commission new power generators that are not fundamentally connected to the public grid. This is exactly what is happening: Microsoft has commissioned Constellation Energy to revive a decommissioned nuclear power plant.
Google is investing a lot of money in the development of so-called Small Modular Reactors (SMR) with salt cooling, which are currently not ready for the market. And Amazon presented three projects in October. The focus is on the company X-energy, which is developing both new nuclear reactors and proprietary fuel for them. Amazon and other venture capital investors are giving X-energy half a billion dollars to accelerate the development of SMRs with gas cooling.
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