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Constellation Shifts Focus to Grid-Connected AI Data Center Projects Amid Regulatory Scrutiny

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Constellation Energy is shifting its strategy for supplying power to AI-driven data centers, now prioritizing grid-connected projects over previously favored direct (co-located) connections to its nuclear power plants, the company said Tuesday.

This pivot comes in response to growing regulatory pressure and industry concerns about the potential grid reliability issues and rising consumer energy costs linked to large-scale co-located data center developments.

“On-grid sales are increasingly attractive to us and to our customers,” said Constellation CEO Joseph Dominguez during a call with investors. However, he added that “behind-the-meter configurations”—where data centers are directly connected to power plants—may still be viable in certain cases.

Constellation, the largest operator of nuclear plants in the U.S., had previously proposed co-located data center developments at several of its reactor sites. But the approach came under scrutiny from the Federal Energy Regulatory Commission (FERC), particularly after a proposed expansion of an Amazon data center at a Talen Energy nuclear facility faced regulatory rejection.

FERC is currently evaluating new rules regarding such off-grid, single-customer arrangements to better manage power flow and protect ratepayer interests.

As the demand for electricity to power AI infrastructure skyrockets, utility firms like Constellation are adapting to meet needs while staying aligned with evolving regulatory frameworks and grid integrity standards.

Talen Energy to Appeal FERC’s Rejection of Amazon Data Center Deal

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Talen Energy (TLN.O) announced plans to appeal the Federal Energy Regulatory Commission’s (FERC) rejection of an amended interconnection agreement for an Amazon data center at its Susquehanna nuclear plant in Pennsylvania. Earlier this year, Talen Energy sold a data center connected to the plant to Amazon (AMZN.O), aiming to increase its capacity from 300 megawatts to 480 megawatts.

However, the deal faced opposition from major utilities American Electric Power (AEP.O) and Exelon (EXC.O). FERC sided with these companies in a November 1 ruling, blocking the interconnection agreement. Talen Energy requested a rehearing in December, but FERC’s failure to issue a decision within 30 days has made the ruling eligible for appeal to a U.S. Circuit Court of Appeals.

The company stated it will pursue an appeal to challenge the rejection. Despite the regulatory setback, Talen’s shares have surged over 200% this year, and were up 0.6% in afternoon trading.