Amazon is significantly expanding its investment in nuclear energy to power its ever-growing network of AI data centers. The latest move involves a long-term power purchase agreement (PPA) with Talen Energy, securing 1.9 gigawatts (GW) of carbon-free electricity from the Susquehanna nuclear power plant in Pennsylvania. This agreement signifies a major step for Amazon, illustrating a shift beyond renewable energy sources to meet the escalating demands of generative AI and cloud computing.
The deal with Talen Energy will run through 2042, with the option to extend it further, ensuring a steady revenue stream for Talen while providing Amazon with a reliable source of carbon-free energy. The power delivery schedule will gradually increase, reaching full capacity by 2032. Furthermore, Amazon and Talen Energy plan to explore expanding the nuclear plant's energy output and potentially constructing new Small Modular Reactors (SMRs) within Pennsylvania.
This isn't Amazon's first foray into nuclear energy. The company has been actively investing in nuclear projects and technologies, including co-locating a data center facility next to Talen's nuclear facility in Pennsylvania. Amazon's recent investments in nuclear energy projects and technologies have surpassed $1 billion. The company also purchased a nuclear-powered data center from Talen for $650 million in March 2024, with plans to demolish that facility and build a larger one in its place.
The surge in demand for data centers, fueled by the rise of AI and machine learning, has placed immense strain on existing power grids. Global data center power consumption is projected to double by 2026, exceeding what the sector consumed in 2022. In the United States, data center power demand is growing rapidly and could outstrip grid supply by 2033. This escalating demand necessitates exploring alternative energy sources, and nuclear energy has emerged as a viable solution.
Nuclear energy offers several advantages for powering data centers. Nuclear power plants provide a consistent and reliable baseload power supply, operating 24/7 regardless of weather conditions. Their capacity factor significantly outperforms other sources like natural gas, wind, and solar. Also, nuclear reactors produce more zero-carbon electricity within the same land area compared to renewable energy sources.
Amazon's commitment to carbon-free energy extends beyond this recent deal. The company had previously pledged to match all electricity consumption across its global operations with 100% renewable energy by 2030, achieving this goal seven years ahead of schedule in July 2024. However, the unprecedented energy demands of generative AI have prompted Amazon to explore additional carbon-free sources, including nuclear energy. Other tech giants like Google and Microsoft have also been exploring nuclear energy to power their data centers.
The agreement is designed to provide Talen with a long-term, steady source of revenue, providing balance sheet flexibility through contracted revenues. The agreement supports the jobs of more than 900 employees currently working at the Susquehanna facility, as well as new construction jobs.
