Amazon has changed its nuclear deal in Pennsylvania to bypass grumpy regulators

New front-of-the-meter agreement avoids direct delivery snag that drew regulator pushback

Amazon has amended its deal with Talen Energy to buy power for a Pennsylvania datacenter from an adjacent nuclear power plant after regulators raised their eyebrows at the original deal.

Talen, operator of the Susquehanna nuclear power plant, announced on Wednesday that it had signed a power purchase agreement (PPA) with Amazon supplying its datacenters adjacent to Susquehanna with 1,920 MW of nuclear power through 2042. The deal also includes exploring the possible construction of small modular reactors on the site, and funding for upgrades that will increase Susquehanna's energy output.

But the crucial part of the announcement comes in Talen noting that the new nuclear power deal will support Amazon's datacenter operations "in the region" – that quoted portion being the key component.

Talen subsidiary Cumulus built the datacenter facility next to Susquehanna specifically to provide co-located energy there, with a dual focus on hyperscalers and crypto mining, and it opened in 2023. Amazon purchased the complex in March 2024. The Amazon deal included an interconnection service agreement (ISA) that supplied energy from Susquehanna directly to Cumulus, but an attempt to amend that deal in November 2024 to increase the colocated load from 300 to 480 MW met with opposition from a pair of utility companies.

The utilities argued to the Federal Energy Regulatory Commission (FERC) that the ISA would mean Cumulus had delivery preference over the grid, meaning communities on the grid served by Susquehanna could see less stability. FERC agreed, blocking the deal. 

Susquehanna's operators appealed the decision, with FERC reiterating its opposition in April. Susquehanna has since appealed the April decision in the Fifth Circuit Court of Appeals.

Talen told us that the agreement it announced yesterday with Amazon eliminates the need for FERC approval altogether.

That's presumably because the new deal isn't a colocation agreement, but a "front-of-the-meter" deal, meaning the 1,920 MW of energy Amazon has purchased from Susquehanna won't be delivered directly, but will instead be shunted to the grid to cover Amazon's increased consumption.

No colocation drag on the grid, no FERC opposition – or so the reasoning likely goes. We've reached out to the FERC to get its take but haven't heard back. Talen didn't answer a question as to whether its legal appeal would continue.

Talen and Amazon's new PPA is typical for other large facilities that consume a lot of energy directly from the grid, and offers more flexibility for Amazon as well - it will be able to draw from the grid to power facilities apart from Cumulus.

It's perfect timing for the cloud and retail behemoth. 

Pennsylvania governor Josh Shapiro announced on Monday that Amazon was planning to invest at least $20 billion to build "multiple high-tech cloud computing and artificial intelligence innovation campuses" across the state. Locations include Luzerne County, where the Susquehanna plant is located, and Bucks County in the east of the state – a region also served by the nuclear facility.

"Our agreement with Amazon is designed to provide us with a long-term, steady source of revenue and greater balance sheet flexibility through contracted revenues," Talen CEO and president Mac McFarland said in a canned statement. "Talen is well positioned to support Amazon's energy needs as it invests further in the Commonwealth of Pennsylvania." ®