U.S. regulators mull issues around siting data centers at power plants

By Laila Kearney

NEW YORK (Reuters) - Costs and reliability concerns related to the burgeoning trend of building energy-intensive data centers on the sites of U.S. power plants were the focus of a technical conference held on Friday by the Federal Energy Regulatory Commission.

As the technology industry races to deploy data centers needed to roll out technologies like generative artificial intelligence, quickly accessing the massive amounts of electricity needed for the centers has become a critical problem.

Connecting data centers directly to power plants, in an arrangement known as co-location, has presented a fast way to access large amounts of electricity, instead of toiling for years in queues to connect to the broader grid.

"I believe that the federal government, including this agency, should be doing the very best it can to nurture and foster their development," said FERC Chairman Willie Phillips, adding that he considered the AI centers were vital to national security and the country's economy.

The arrangements have sparked concerns that the co-located centers will increase power bills for everyday customers by using grid infrastructure and services paid for by the public. Co-located data centers have also raised reliability questions, in part, by diverting steady power from the grid or potentially sucking electricity from the system if the neighboring power plant goes down.

"Does the customer get to still draw power from the grid? Because if it does, that's going to have a huge impact," said Commissioner Mark Christie.

The technical conference could lead to new guidelines for who is responsible for certain costs related to co-located data centers and how the centers are governed.

FERC is also currently gathering details on a regulatory battle being waged by electric utilities over a co-located Amazon data center at a Talen Energy nuclear power plant in Pennsylvania. Talen's interconnection agreement for the center is being opposed by utilities Exelon and American Electric power, and FERC's decision could set a precedent for similar deals.

(Reporting by Laila Kearney; Editing by David Gregorio)