News Summary
Talen Energy has entered a significant power purchase agreement with Amazon Web Services (AWS) worth $18 billion to supply energy to data centers in Pennsylvania. This deal, which shifts AWS’s energy supply framework, allows Talen to provide between 1,680 and 1,920 megawatts of energy from its Susquehanna nuclear power plant. The agreement is set to enhance AWS’s commitment to renewable energy and is projected to create around 1,250 jobs in the state, while also bolstering energy security and infrastructure development.
Pennsylvania – Talen Energy has signed a substantial power purchase agreement (PPA) with Amazon Web Services (AWS) to provide energy to data centers in Pennsylvania, with the contract valued at $18 billion over its lifetime. The agreement will supply between 1,680 and 1,920 megawatts (MW) of energy from Talen’s majority-owned Susquehanna nuclear power plant.
This new arrangement shifts the existing 300-MW co-location setup with AWS to a “front of the meter” framework. This framework allows Talen to supply energy without the need for approval from the Federal Energy Regulatory Commission (FERC). The transition to this new arrangement is projected to take place in spring 2024, pending the completion of essential transmission upgrades.
Talen had previously attempted to amend an interconnection service agreement to facilitate expanded sales to the AWS data center, but FERC rejected the proposal. Under the terms of the new PPA, Talen expects to generate approximately $18 billion at full capacity, with scheduled electricity deliveries ramping up significantly from 840 MW to 1,200 MW by 2029, and reaching between 1,680 MW and 1,920 MW in 2032.
In this arrangement, Talen will serve as the retail power supplier to AWS, while PPL Electric Utilities will oversee the transmission and delivery of electricity. Additionally, both companies are exploring the potential construction of small modular reactors (SMRs) in Pennsylvania to further enhance the energy supply. Plans are also underway to increase the generating capacity of the existing Susquehanna nuclear plant through upgrades.
The agreement aligns with AWS’s commitment to invest around $20 billion in developing data center infrastructure in Pennsylvania. This partnership is poised to support AWS’s demand for cloud and artificial intelligence operations powered by carbon-free electricity.
Talen Energy’s total installed power capacity stands at about 10.7 gigawatts (GW), primarily within the PJM electricity grid. Of this, Talen owns a 90% stake in the 2.5-GW Susquehanna plant, which generated over 18 gigawatt-hours (GWh) of energy last year at a cost of less than $24 per megawatt-hour (MWh).
The increase in electricity demand in the U.S., driven especially by data centers and advancements in AI, has led many technology firms to seek long-term energy contracts to secure their operations. However, Monitoring Analytics, the market monitor for PJM, has raised concerns regarding the effect of utilizing existing power plants to meet the energy needs of data centers on market dynamics.
Following the announcement of the PPA, Talen Energy experienced a boost in its stock price, surging nearly 8% in premarket trading. Pennsylvania Governor Josh Shapiro has recognized the partnership as a significant economic opportunity, predicting it will create around 1,250 jobs and enhance energy security within the state.
This development is part of a broader trend, with AWS and other technology companies increasingly committing to nuclear energy as a sustainable solution in their operational strategies. Such initiatives not only promise to lower carbon footprints but also ensure reliable energy availability for their growing business needs.
Deeper Dive: News & Info About This Topic
- Talen Energy News Release
- ESG Dive: Amazon Talen Energy Nuclear PPA
- Reuters: Talen Energy Amazon Nuclear Power Deal
- Utility Dive: Talen Amazon Nuclear Data Center
- The Register: Amazon Talen Nuclear Deal
- Wikipedia: Nuclear Energy
- Google Search: Amazon Talen Energy Nuclear Deal
