FERC Explores Co-location of Data Centers at Power Plants

The Federal Energy Regulatory Commission (FERC) held a technical conference on Friday to discuss the impacts of constructing data centers at sites of U.S. power plants. This trend arises from the technology industry's need for rapid access to large amounts of electricity to support facilities involved in developments like generative artificial intelligence.

FERC Chairman Willie Phillips expressed support, emphasizing the significance of the development of AI data centers for national security and the economy. However, the practice of colocating data centers with power plants to enable faster electricity access has raised concerns about potential cost increases for consumers and grid reliability.

Commissioner Mark Christie noted the potential impact on the grid from colocated data centers, particularly in the event of outages at adjacent power plants, as they continue to draw power. The conference aims to address who should bear the costs associated with these data centers and how they should be regulated.

FERC is also investigating a dispute regarding the colocating of an Amazon (NASDAQ:AMZN) data center at a Talen Energy nuclear plant in Pennsylvania. Public utilities Exelon (NASDAQ:EXC) and American Electric Power are contesting Talen's interconnection agreement. FERC's decision on this matter could set a precedent for future colocating regulations.