Nuclear Power and Data Centers: FERC Ruling Highlights Virginia’s Energy Balancing Act

A recent Federal Energy Regulatory Commission (FERC) ruling denying expanded nuclear power sales to an Amazon data center campus in Pennsylvania has implications that extend well beyond state lines. For Virginia’s thriving data center corridor, where similar partnerships between nuclear facilities and tech companies are being explored, the decision underscores a crucial reality: the Commonwealth’s energy future requires a carefully calibrated mix of power sources.

The timing of this ruling is particularly relevant as Virginia grapples with unprecedented data center growth while simultaneously pursuing ambitious clean energy goals. As legal and energy professionals advise clients on power procurement strategies, the decision offers valuable insights into how regulators may view direct partnerships between nuclear facilities and major power consumers—and why a diversified energy approach remains critical.

Understanding the FERC Decision

The case centered on a proposed expansion of “behind-the-meter” power sales from Talen Energy’s Susquehanna nuclear plant to a neighboring Amazon Web Services (AWS) data center campus. The plan would have increased direct power sales from 300 MW to 480 MW, part of a broader arrangement where AWS had purchased a 960-MW data center campus adjacent to the plant for $650 million.

FERC’s 2-1 rejection hinged on two key issues that resonate with Virginia’s energy landscape. First, opposing utilities argued that such arrangements could allow data centers to benefit from transmission infrastructure without paying their fair share of system costs. Second, they contended that these deals could potentially shift up to $140 million annually in costs to other ratepayers. While FERC Chairman Willie Phillips dissented, arguing the decision could hamper both electric reliability and national security, the majority found that the parties hadn’t sufficiently justified the need for special treatment in this case.

Implications for Virginia’s Energy Landscape

The FERC ruling comes at a pivotal moment for Virginia. Governor Youngkin’s “all of the above” energy strategy has positioned nuclear power—including Small Modular Reactors (SMRs)—as a key component of the Commonwealth’s energy future. Yet projects like the Surry Green Energy Center demonstrate both the promise and challenges of nuclear-data center partnerships. This proposed development, which aims to eventually power 19 data centers through a combination of SMRs and hydrogen fuel, illustrates the complex planning horizon energy developers face.

The practical reality is that while nuclear power offers reliable, carbon-free baseload generation, it represents just one piece of Virginia’s energy puzzle. Data centers need immediate power solutions, while new nuclear projects—whether traditional or SMR—require lengthy development timelines and face regulatory hurdles. The FERC decision suggests that future nuclear-data center partnerships in Virginia will need careful structuring to address both grid reliability concerns and equitable cost allocation.

Moving Forward: Practical Considerations for Virginia’s Energy Future

For companies navigating Virginia’s evolving energy landscape, the FERC ruling reinforces the importance of a diversified approach to power procurement. While nuclear power remains a valuable long-term option, both immediate energy needs and cost considerations point toward a mixed strategy. Legal and business professionals advising data center operators and energy providers should consider several key factors:

• Renewable Integration: Solar energy with storage has emerged as a particularly cost-effective option, with Lazard analysis suggesting it costs less than half that of new nuclear facilities. Virginia’s robust solar development pipeline offers immediate opportunities for data centers to incorporate renewable power into their energy mix.
• Timeline Management: Data center projects typically need power within 2-3 years of groundbreaking, while new nuclear facilities—even SMRs—may require a decade or more for development and approval. Solar projects, by contrast, can often be completed within 18-24 months of approval.
• Risk Distribution: The Talen-AWS case demonstrates the regulatory risks of over-reliance on single-source power arrangements. Virginia businesses should consider portfolio approaches that combine nuclear, solar, and other generation sources to optimize both reliability and cost.

Conclusion

The FERC ruling on the Talen-AWS partnership serves as a timely reminder that Virginia’s energy future cannot rely on any single solution. While nuclear power—both traditional and SMR—has an important role to play in providing reliable, carbon-free baseload power, it must be part of a broader strategy that includes solar, wind, and other generation sources. The immediate demands of Virginia’s growing data center industry, combined with the timeline and cost realities of different power sources, make this balanced approach not just prudent but necessary.