Talen, Constellation and Vistra tumble after government rejects Amazon nuclear data center agreement

Technology companies’ push to directly power artificial intelligence with nuclear plants hit a major roadblock, after a federal regulator rejected a request to increase power for an Amazon data center.

The Federal Energy Regulatory Commission on Friday rejected a request to increase the amount of power the Susquehanna nuclear plant in Pennsylvania can dispatch to an Amazon data center campus.

Independent power producer Talen Energy in March sold the data center campus to Amazon for $650 million, which would be powered by the nuclear plant in a first-of-its-kind deal.

Talen’s stock fell more than 5% in premarket trading on FERC’s denial order. Constellation Energy and Vistra Corp. tumbled more than 11% and nearly 3%, respectively, in sympathy. Investors were expecting Constellation and Vistra to announce similar deals at some point.

The grid operator PJM Interconnection and the Susquehanna plant, which Talen owns, had filed a request to increase the amount of power dispatched to the Amazon data center from 300 megawatts currently to 480 megawatts.

The arrangement, called co-location by the power industry, “could have huge ramifications for both grid reliability and consumer costs,” said FERC Commissioner Mark Christie in his opinion backing the order.

Talen said FERC’s decision will have a “chilling effect on economic development in states such as Pennsylvania, Ohio, and New Jersey” in a statement Monday. The power company said it is evaluating its options with a “focus on commercial solutions.”

The Amazon data center campus can still use 300 megawatts of power from the Susquehanna nuclear plant, according to Talen. The company said the deal is “is just and reasonable and in the best interest of consumers.”

The FERC decision does not directly affect Constellation’s plans to restart the Three Mile Island nuclear plant in 2028 through a power purchase agreement with Microsoft. Three Mile Island will dispatch power to the electric grid, rather than directly power Microsoft’s data centers.

But Constellation and Vistra have expressed interest in striking deals with tech companies that are similar to the agreement between Talen and Amazon.

Data centers that power AI and cloud computing are consuming growing amounts of electricity. Utilities are scrambling to find ways to power the growing electric load. Tech companies are increasingly turning to nuclear power because it is reliable, fossil free and does not emit carbon dioxide.

Vistra and Constellation are two of the best-performing stocks in the S&P 500 this year, as investors bet on a potential windfall from the tech sector’s growing energy needs.

Vistra’s stock has more than tripled this year, outpacing even Nvidia to become the best-performing stock in the market. Constellation has more than doubled and is the fourth-best stock in the S&P 500 this year.