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Talen Energy considers alternative options for data center supply after Amazon's setback

Talen Energy, the U.S. energy company, is looking at alternative arrangements for supplying electricity to data centres after regulators rejected a plan that would have fuelled an Amazon data centre directly from Talen’s Pennsylvania nuclear plant.

The prospect of striking direct deals with Big Tech data centers has sparked a huge interest in independent U.S. energy producers such as Talen. This is what has pushed the shares of these companies to new highs.

Co-located arrangements in which power plants are located near or at the data centers could eliminate the year-long waiting times for connecting to the wider electrical grid.

Nevertheless, some companies are now making alternative plans after the Federal Energy Regulatory Commission ruled against their arrangements.

Mac McFarland, CEO of Talen, said that there were multiple ways to power data centers during a conference call with investors.

Talen is also considering data center deals that include the connection of the centers to grids as part of commercial power contracts.

Giant Independent Power Producer

Constellation Energy earlier this week

After considering co-located deals for data centers at a number of its nuclear plants, the company said that it would also focus on more conventional power arrangements in data centers.

Talen and Amazon's co-located data center agreement, announced in 2024, is a world first. Talen's power agreement with Amazon would see the nuclear plant in Susquehanna supply electricity to the data center up to 960 megawatts.

FERC ruled in response to this deal last year that the power Amazon uses for its data center would be limited to 300 megawatts. This was due to concerns over power reliability and cost for the broader community.

Talen executives confirmed that they continue to supply electricity to Amazon's data center and plan to reach 120 Megawatts by the year end. Talen is appealing FERC’s decision, and anticipates a court date on the case within the next few weeks. (Reporting and editing by Laila K. Kearney)

(source: Reuters)