Constellation Energy Shifts Focus to On-Grid Power for Data Centers Amid Regulatory Scrutiny
Constellation Energy is increasingly focusing on potential data center projects that connect directly to the US electrical grid, moving away from its previous emphasis on powering giant server warehouses directly from its nuclear power plants, as reported by Reuters.
This strategic pivot comes as big tech companies, in their race to secure vast amounts of electricity for their expanding artificial intelligence operations, demand new types of energy deals.
New Types of Energy Agreements with Big Tech
In response to the growing electricity needs of AI data centers, Constellation has explored co-located arrangements that link these facilities directly to nuclear power plants, bypassing the traditional process of waiting for grid connections.
However, such arrangements have faced significant regulatory hurdles. The concern is that diverting electricity from the grid to serve single customers, like AI data centers, could lead to higher power bills and potential issues with grid reliability.
Regulatory Challenges and FERC Involvement
According to Reuters, Constellation’s shift toward on-grid sales was highlighted by CEO Joseph Dominguez during a call with investors. He emphasized that on-grid power sales were becoming increasingly attractive to both the company and its customers, but also noted that behind-the-meter configurations, where power is supplied directly from a plant, could still make sense for some customers.
The company’s push for co-located data centers linked to its nuclear plants encountered opposition when the Federal Energy Regulatory Commission (FERC) ruled against a proposed expansion of an Amazon data center connected to a Talen Energy nuclear site.
Following this, FERC is now considering new rules regarding co-located power projects, which could reshape the landscape for such arrangements moving forward.
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Constellation's Strategy and the Future of Co-Located Data Centers
Constellation, the largest operator of nuclear power plants in the US, had earlier indicated its interest in co-located and off-the-grid data center projects at several of its nuclear reactor sites. These projects were seen as a way to meet the growing demand for reliable, clean energy to power the data centers of the future, while also helping to maintain grid stability.
