Amazon's Data Center Plans Amid Regulatory Challenges

Amazon (NASDAQ:AMZN) remains committed to building a data center campus near a nuclear power plant in Pennsylvania despite a federal regulator's rejection of the deal.

On Friday, the Federal Energy Regulatory Commission (FERC) voted against Talen Energy's (NASDAQ:TLN) request to increase power supply for an Amazon Web Services (AWS) data center.

Talen previously stated that AWS would pay $650 million for a campus providing up to 960 megawatts next to its Susquehanna nuclear plant, although Talen currently has rights for only 300 megawatts.

The rejected plan was indicative of significant cloud-computing players' investment in power sourcing for data centers. However, some utility groups opposed this direct connection to Talen's plant, warning it could jeopardize grid reliability and raise rates.

Following the FERC's decision, shares in U.S. power producers fell, with concerns that the ruling might hinder big tech firms like Amazon from accessing nuclear energy for their data centers.

Despite this setback, Amazon aims to continue pursuing carbon-free energy partnerships with companies like Talen to support its data centers across the U.S. An Amazon spokesperson indicated that the company plans to proceed with the Talen project.

Shares in Talen held steady in premarket trading but have increased over 160% this year.