The nuclear energy sector in the United States was shaken by the rejection of a data center project proposal by the Federal Energy Regulatory Commission (FERC). This project, led by Amazon in partnership with Talen Energy, aimed to power a data processing center located in Pennsylvania through a nuclear power plant.
Amazon had reached an agreement with Talen Energy to purchase a data center powered by the Susquehanna nuclear power plant in Pennsylvania. Last June, PJM Interconnection, a member of the electric grid covering the northeastern United States, requested that FERC authorize an increase in the data center’s power capacity from 300 to 480 megawatts.
The FERC Rejection and Its Rationale
On Friday, FERC officially rejected PJM Interconnection’s request. Commissioner Mark Christie, an influential member of FERC, justified this decision by citing potential risks to the reliability of the electric grid and possible impacts on consumer costs. According to Christie, expanding capacity could place additional pressure on the existing energy infrastructure, leading to significant financial and operational consequences.
Talen Energy disputed this decision in a press release, calling the project “fair, reasonable, and in the interest of consumers.” The group emphasized that this decision could hinder economic development in several northeastern states, including Pennsylvania, Ohio, and New Jersey. Talen Energy stated it intends to continue discussions with FERC to seek a more favorable resolution for this proposal.
Market Impact on Energy Companies
Following this decision, several nuclear energy companies saw a notable drop in their stock prices. Talen Energy, directly involved in the project, experienced a 2.42% decline in its share price. Constellation Energy, a major nuclear power plant operator, fell by 9.75%, while Vistra Corp, another sector player, dropped by 3.05%.
Start-ups in Modular Reactor Technology Also Affected
Investor concerns also impacted start-ups in the small modular reactor (SMR) sector. Oklo, backed by Sam Altman, the CEO of OpenAI, and NuScale experienced declines of 3.37% and 4.23%, respectively. Investors appear wary of the future of innovative nuclear technology, given increasingly stringent energy regulations.
Tech Giants Seek Nuclear Energy
Amazon, along with other technology giants such as Microsoft and Google, recently signed multiple agreements with nuclear energy providers to meet their massive energy needs, which are further exacerbated by the rise of generative artificial intelligence (AI). AI generates a significant energy demand in the data centers required for its development and processing.
As tech companies pursue initiatives to ensure a stable and sustainable energy supply, FERC’s recent decision raises questions about the viability of nuclear energy-focused projects. The future of these partnerships now appears uncertain, prompting concerns over regulatory obstacles that could hamper innovation within the sector.
