Energy

Ready For Blackouts? Techies Are Buying Up One Of The Remaining Reliable Sources Of Power For Their AI Needs

(Screen Capture/CBS Evening News)

Tech companies are increasingly looking to nuclear energy to meet their evolving power needs, potentially at the expense of grid reliability and ordinary American ratepayers, The Wall Street Journal reported.

The owners of about one in every three American nuclear plants are negotiating with technology firms to reach deals in which the plants would sell tech companies nuclear-generated electricity to operate their power-hungry data centers, key infrastructure that the tech firms need to support the artificial intelligence (AI) boom, according to the WSJ. The trend could divert reliable energy generation away from the rest of the power grid at a time when grid watchdogs are warning of longer-term reliability problems as electricity demand is expected to grow rapidly in the coming years due to the proliferation of data centers, electric vehicles (EVs), advanced manufacturing facilities and more.

For example, Amazon Web Services (AWS) is close to reaching an agreement with Constellation Energy to buy electricity from an East Coast nuclear plant, and AWS also spent $650 million on a nuclear-powered data center in Pennsylvania earlier this year, according to the WSJ. The Pennsylvania data center can receive enough electricity to keep the lights on in hundreds of thousands of households, and its purchase spurred tech sector interest in similar deals that allow companies to buy power directly from plants without needing to spend much on additional grid infrastructure to access that electricity.

This Populous Blue State Has A Green Energy Mandate. Experts Say It Threatens Grid Reliability https://t.co/GNf2a5Dk2S

— Daily Caller (@DailyCaller) December 9, 2023

Data centers may end up accounting for as much as 9% of all power consumption in America by 2030, according to the WSJ, and some officials — such as Pennsylvania Consumer Advocate Patrick Cicero — are concerned that the tech sector’s union with nuclear energy could hurt ordinary consumers by driving up prices and commanding a large share of the nation’s reliable carbon-free power.

Reliability and affordability could be disrupted for ordinary ratepayers when “massive consumers of energy kind of get first dibs,” Cicero told the WSJ. “Never before could anyone say to a nuclear-power plant, we’ll take all the energy you can give us.”

If tech companies looking to strike these deals sought to fund the additions of green energy generation to offset the amount of power their data centers consume, the net effect may actually end up being an increase in reliance on natural gas power plants, according to the WSJ. Such an outcome, driven by the fact that natural gas is reliable while sources like wind and solar are intermittent, would likely complicate the emissions reduction targets of many of the states that are courting tech companies to build data centers inside their borders.

“To supplement our wind- and solar-energy projects, which depend on weather conditions to generate energy, we’re also exploring new innovations and technologies, and investing in other sources of clean, carbon-free energy,” an Amazon spokesperson told the WSJ.

However, building new natural gas plants in the coming decades may also become a challenge in light of the stringent power plant emissions rules recently finalized by President Joe Biden’s Environmental Protection Agency (EPA). Critics have explained that the rules could effectively sap the economic incentive for developers to build new natural gas plants in the future because the EPA has effectively required prospective developers to implement costly carbon capture and sequestration (CCS) technology to cut emissions.

The tech industry’s newfound interest in buying up huge amounts of nuclear-generated power is also developing amid serious concerns about U.S. grid reliability. In broad strokes, federal and state policymakers — especially Democrats — are pursuing policies that induce the retirement of reliable fossil fuel-fired generation and also that figure to drive up electricity demand in the coming years.

This trend has prompted grid watchdogs and officials to raise the alarm about a possible impending power crisis.

Federal Energy Regulatory Commission (FERC) Commissioner Mark Christie has warned of the potential for “catastrophic consequences” if the trend accelerates, while the Biden-appointed  FERC Commissioner has similarly expressed that he is “extremely concerned” about reliability in light of America’s ongoing power grid transformation.

Meanwhile, the North American Electric Reliability Corporation (NERC) has cautioned in multiple reliability assessments that huge swaths of America are already at elevated risks of serious supply crunches in strong winter and summer weather conditions.

Featured image credit: (Screen Capture/CBS Evening News)