Amazon joins the big nuclear party, buying 1.92 GW for AWS

In a significant move this week, Amazon has aligned itself with a growing trend among major tech companies to source energy from established nuclear power facilities. The retail giant will utilize 1.92 gigawatts of electricity generated by Talen Energy’s Susquehanna nuclear power plant in Pennsylvania to support its AWS cloud and AI operations. This strategic agreement, revealed on Wednesday, modifies a prior arrangement with Talen. Initially, Amazon planned to construct a data center adjacent to the Susquehanna plant, allowing it to draw power directly from the facility without going through the grid. However, regulators halted this plan due to concerns that it would place an unfair financial burden on customers using the grid. The current deal shifts Amazon's power purchase agreement to a more conventional structure, where the Susquehanna plant supplies power to the grid. This means that every kilowatt-hour consumed will now include necessary transmission fees that aid in maintaining and upgrading the grid. Talen has indicated that the transmission infrastructure will be reconfigured by spring 2026, and the agreement extends through 2042. Additionally, Amazon and Talen have announced intentions to explore the construction of small modular reactors within Pennsylvania. This approach aims to enhance electricity production at existing nuclear plants, which is often seen as a more feasible method for increasing nuclear output. Potential upgrades could involve using more enriched fuel to generate additional heat, adjusting operational settings for greater efficiency, or renovating turbines for improved performance. The trend began last year when Microsoft initiated a collaboration with Constellation Energy to reactivate a reactor at Three Mile Island, a project valued at $1.6 billion with a capacity of 835 megawatts. Earlier this month, Meta also partnered with Constellation to acquire the renewable energy attributes of a 1.1 gigawatt nuclear facility in Illinois. While Amazon's plan to build new small modular reactors is ambitious, it aligns with the efforts of various startups aiming to reduce construction costs through mass production of components. Notably, Amazon has invested in X-energy, a company planning to introduce an additional 300 megawatts of nuclear capacity in the Pacific Northwest and Virginia. Talen emphasized that the new energy from both existing reactors and future small modular reactors aims to contribute positively to the PJM grid, addressing potential regulatory concerns about financial impacts on ratepayers.