Talen Energy has entered into a 1,920-MW power purchase agreement with Amazon Web Services to supply data centers in Pennsylvania from the independent power producer’s majority-owned Susquehanna nuclear power plant, the company said Wednesday.
Under the PPA, Talen’s existing 300-MW co-location arrangement with AWS will shift to a “front of the meter” framework that doesn’t require Federal Energy Regulatory Commission approval, according to Houston-based Talen. The company expects the transition will occur next spring after transmission upgrades are finished.
FERC in November rejected an amended interconnection service agreement that would have facilitated expanded power sales to a co-located AWS data center at the Susquehanna plant. The agency is considering potential rules for co-located loads in PJM.
Talen expects to earn about $18 billion in revenue over the life of the contract at its full quantity, according to an investor presentation. The contract, which runs through 2042, calls for delivering 840 MW to 1,200 MW in 2029 and 1,680 MW to 1,920 MW in 2032.
Talen will act as the retail power supplier to AWS, and PPL Electric Utilities will be responsible for transmission and delivery, the company said.
Talen and Amazon will explore building small modular reactors in Pennsylvania and pursue expanding Susquehanna’s output through uprates, the company said. Amazon on Monday said it plans to spend about $20 billion building data centers in Pennsylvania.
The AWS power supply contract “creates a platform to expand across [the] Talen portfolio,” the company said in its presentation. Talen owns about 10.7 GW, almost entirely in PJM, according to the company’s annual report filed with the U.S. Securities and Exchange Commission on Feb. 28.
Last year, Talen’s 90% stake in the 2.5-GW Susquehanna plant produced more than 18 GWh at an all-in cost of less than $24/MWh, Talen said in the report.
The power plant has historically generated revenues from sales into the PJM Interconnection’s wholesale energy and capacity markets, and from strategic hedging, according to the report.
Monitoring Analytics, PJM’s market monitor, has warned that using existing power plants to supply data centers could have a significant effect on the grid operator’s markets.
Forecast data center load growth helped tighten supply and demand conditions in PJM’s last capacity auction, resulting in a $9.3 billion increase in capacity market revenue in the auction, the market monitor said in a report released last week. Joseph Bowring, president of Monitoring Analytics, has called for requiring new data centers to provide their own power supplies from new resources.
Susquehanna’s two units are licensed through 2042 and 2044, respectively, according to Talen.
