Constellation touts co-locating data centers with nuclear
Nuclear

Constellation touts co-locating data centers with nuclear

Constellation Energy CEO Joe Dominguez said co-locating data centers with nuclear power plants is “the fastest and most cost-effective way to develop critical digital infrastructure without burdening other customers with expensive upgrades.”

Constellation, which operates the largest nuclear fleet in the U.S., is working with data center customers on potential co-location deals, Dominguez said during the company’s second-quarter earnings call this week.

Data centers project to be significant drivers of growth in electricity demand. According to a study recently released by EPRI, data centers could consume up to 9% of U.S. electricity generation by 2030 — more than double the amount currently used.

“The simple fact is that data centers are coming, and they’re essential to America’s national security and economic competitiveness,” said Dominguez.

The rapidly growing data center industry has sparked an active and even divisive discussion among policymakers and stakeholders about how to powering them.

Notably, Exelon and American Electric Power (AEP) are protesting a proposal that would result in the co-location of an Amazon Web Services (AWS) data center at Talen Energy’s Susquehanna nuclear plant in northeast Pennsylvania.

In a filing to the Federal Energy Regulatory Commission (FERC) last month, the parties said the proposed Interconnection Service Agreement (ISA) raises unresolved questions and could result in unfair cost burdens on ratepayers and negatively impact market operations and reliability.

FERC is now seeking more information about the amended ISA. Last week the federal agency called for a technical conference in the fall to discuss co-locating large loads like data centers with generators.

Constellation (a former Exelon entity) believes co-location allows significant new load to be served without requiring expensive system upgrades, especially when grid operators are struggling to integrate new resources faster.

“Friday’s actions at FERC may have slowed things, but ultimately will be constructive in our view,” said Dominguez on the investor call. “We think the benefits [of co-location] are compelling.”

In terms of any co-location deals of its own, Dominguez said Constellation wouldn’t be timebound by any FERC rulemaking on the Talen ISA. He did acknowledge a tightening in the market and more urgency for participants to lock up supply.

“We independently are working on contractual provisions that will allow us to manage whatever outcome comes out of those proceedings,” he said.

Dominguez noted PJM Interconnection’s latest capacity auction, which saw energy prices skyrocket more than 800%. Insufficient future transmission planning, the retirement of fossil-fired generation, long interconnection queues and the implementation of FERC market reforms are all contributing to the hikes.

The auction sends a build signal to generators, but Dominguez said nuclear power specifically could emerge a winner from PJM’s skyrocketing prices. Constellation operates eight nuclear plants (16 reactors) in PJM territory.

“We expect to see higher sustained pricing for capacity to address reliability needs and send more accurate price signals to retain, operate and relicense our plants,” he said.

Meanwhile, PJM utilities have now identified at least 50 GW of expected data center load growth, Dominguez reported.

He said despite disagreement on the vehicle to power data centers, there is a great opportunity for Constellation to work with utilities to bring both grid-connected and co-located projects along.

“We’re still fairly early innings in terms of understanding all of the different use cases and how our resources will interact with the grid,” he said.

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