Several prominent stocks linked to the "nuclear power + AI" concept experienced declines as the U.S. Federal Energy Regulatory Commission (FERC) rejected Talen Energy's (TLN, Financial) proposal to increase power supply from its nuclear plant to Amazon's data center. This decision impacts a significant deal between Talen Energy and Amazon Web Services (AWS), which involves a $650 million sale of the Cumulus Data Center located near Talen's Susquehanna nuclear power plant. The data center's power demand is projected to reach 960MW upon completion, though only half has been built.
The deal included a long-term nuclear power purchase agreement between AWS and Talen Energy, seen as a promising short-term solution amid rising AI demands. However, U.S. utilities such as American Electric Power and Exelon opposed increasing the nuclear plant's power usage from 300MW to 480MW, claiming it could threaten grid reliability and raise costs for other users.
FERC explained that the proposal did not sufficiently justify an exception to federal rules, emphasizing that such transactions should undergo thorough scrutiny. Despite the rejection, AWS can continue using the existing 300MW capacity. FERC's chairman voiced concerns over potential setbacks to power reliability and national security but underscored AI's importance to economic growth.
The issue highlights the emerging conflict between data center power needs and those of ordinary consumers. PJM Interconnection, which applied for the increased power capacity, cautioned that power shortages might arise by 2030, posing further reliability challenges.
Following the decision, Talen Energy's stock fell nearly 8% at the opening but later recovered to a 3% decline. The company expressed disagreement with FERC's ruling and is evaluating its options, asserting that the co-location of nuclear plants and data centers serves consumer interests and avoids costly grid upgrades. Driven by AI's potential, Talen's stock had tripled earlier this year.
Consolidation Energy, another key player in the nuclear power-data center space, saw its stock drop over 10% despite reporting better-than-expected quarterly earnings and elevating its annual profit guidance after its stock also doubled this year.
