Amazon Goes Nuclear in Pennsylvania

Amazon Web Services has expanded its Pennsylvania presence with a nuclear-powered facility. The global cloud provider paid $650 million for Talen Energy’s 1,200-acre Cumulus data center campus, located next to the Susquehanna Steam Electric Station, a nuclear power plant in Berwick, Penn. AWS plans to expand the campus to 960 megawatts. Talen will supply electricity via a 10-year Power Purchase Agreement.

The deal includes all land, power infrastructure, powered shell and intangibles on the campus. The seller will obtain $350 million at close, with another $300 million in escrow until some development milestones are reached later this year.

---

READ ALSO: Will the Data Center Industry Grow More in ’24?

---

Talen will use a portion of the gross proceeds to buy out the last 5 percent equity stake in its subsidiary, Cumulus Digital—the entity developing the data center campus. After paying off debt, interest, transaction fees, along with other expenditures, the energy company expects to generate net proceeds of roughly $361 million once the deal is complete.

A carbon-free data center campus

The data center campus currently includes a 48-megawatt, 300,000-square-foot powered shell which Cumulus completed last year. This facility, along with future expansions, is directly connected to Susquehanna’s power stations. The nuclear plant is the sixth largest in the U.S., producing 2.5 gigawatts of carbon-free energy.

As part of its contractual commitments, AWS will ramp up deployments in 120-megawatt increments over several years. It also has a one-time option to cap these commitments at 480 megawatts. A separate agreement states that Talen will also receive additional revenue from AWS, related to sales of carbon-free energy.

AI, HPC amplify challenges to sourcing clean power

Data centers have become more efficient in using power over the last decade. Although workloads have more than doubled, power usage has remained mostly flat since 2015, JLL research shows. However, with the growth in scale from high-performance computing and AI workloads, securing power has become the number one issue for data center developers and operators.

And the added layer of transitioning to sustainable energy makes everything even more challenging. The same research shows that the U.S. requires an additional investment of $2 trillion to upgrade its grid and grow the renewable energy supply. For the data center industry, this translates into the continued growth of secondary and tertiary markets, where power procurement timelines are more feasible.

Large players like Amazon are able to make huge commitments—such as the $7.4 billion investment announced last year in Ohio—to secure the power they need over the next decade. But other major companies are intensifying their investments into the sector as well. Some of the largest deals of last year included Blackstone’s $7 billion venture with Digital Realty, Vantage’s $6.4 billion equity deal, and EdgeCore’s $1.9 billion in green financing.