Constellation Energy seeks new US grid rules on co-located data centers
Constellation seeks rules on connecting onsite data centers to directly to power plants
Co-location criticized for potential grid reliability risks
Rival Exelon says it supports fair policies for co-location projects
Adds Exelon comment, new details from the complaint throughout
Nov 26 (Reuters) -Constellation Energy CEG.N is asking U.S. regulators to make new rules for connecting customers directly to power plants, saying insufficient guidance has let electric utilities unfairly thwart attempts to site, or co-locate,data centers at its nuclear facilities.
In a complaint filed against grid operator PJM Interconnection with the Federal Energy Regulatory Commission on Friday, Constellation asked for a fast-tracked review to set rules that would govern connecting fully isolated co-located customers.
Constellation, the largest operator of U.S. nuclear power plants,said that some of its own projects to develop data centers at power plant sites are being stymied by the lack of clarity.
Its Limerick site in Pennsylvania is being threatened by the lack of rules governing co-location by PJM, the largest U.S. grid operator that oversees supply in a 13-state region, it added.
Co-location allows energy-intensive customers like data centers to quickly access large amounts of electricitydirectly from power plants instead of waiting in lengthy lines to connect to the broader grid.
The arrangements have promised to expedite Big Tech's generative artificial intelligence expansion and have propelled company shares of Constellation this year on the prospect of signing multiple co-located power deals.
Co-location has also drawn recent criticism from utilities and regulators, which have warned that the deals create power reliability risks by diverting electricity from the grid and threaten to raise power bills.
FERC earlier this monthrejected an agreement to increase the power capacity of an Amazon AMZN.O data center connected directly to Talen Energy's TLN.O Susquehanna nuclear powerplant in Pennsylvania, citing risks to grid reliability and a rise in costs for consumers.
Constellation backed Talen in that regulatory battle brought by utilities Exelon EXC.O and American Electric Power AEP.O.
"Utilities have taken the law into their own hands and are unilaterally blocking co-location projects unless the future data center customers accede to utility demands," Constellation said in itscomplaint.
Those demands include requiring the projects take certain transmission and distribution services from the utility or its affiliates, Constellation said.
It said Exelon refused to complete interconnection work at the LaSalle nuclear plant in Illinois for a new co-located data center. Constellation said the refusal could cost it $15 million to $19 million.
Blocking or delaying data center power supply could set back the U.S. technology industry in the global race to dominate AI and threaten national security, Constellation argued.
Exelon told Reuters on Tuesday that it would participate in the FERC proceeding and advocate for policies that were fair, support reliability and affordable power prices.
"Exelon fully supports efforts to foster innovation and enhance national security, and supports customers' rights to co-locate with generators safely, reliably, and in compliance with established rates," Exelon said in an email.
PJM and Constellation did not immediately respond to requests for comment.
Reporting by Laila Kearney in New York and Sourasis Bose in Bengaluru; Editing by Sriraj Kalluvila and Marguerita Choy
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