By Mark Jaffe, EUCI energy writer
The independent market monitor for the PJM Interconnection is calling on federal regulators to reject an agreement to provide power to a planned Pennsylvania Amazon data center until there is evidence it won’t impact retail energy costs.
The PJM is the largest grid operator in the U.S. covering Midwestern states and mid-Atlantic states, including Pennsylvania. The proposed transmission security agreement (TSA) is between Amazon Data Services and PECO Energy.
“The TSA does not address the most important reliability and economic issues,” the filing to the Federal Energy Regulatory Commission (FERC) said.
In June, Amazon announced that it would spend $20 billion on two data center complexes in Pennsylvania. One is slated to be built in northeastern Pennsylvania near the Susquehanna nuclear power plant, which would provide power.
The second complex – served by PECO Energy – will be built in Fairless Hills, north of Philadelphia, on the site of a former U.S. Steel mill.
While the agreement includes protections for the investment in transmission to serve the Fairless Hills data center if Amazon delays construction or if the data center fails to reach commercial operation, but it doesn’t deal with the energy demands the facility will create.
PECO Energy tested whether the grid could serve a new large data center, but neither it nor PJM did comparable tests to see if there was adequate generation capacity, the market monitor said.
“The TSA includes important provisions that protect [retail] customers from some significant economic risks based on the cost of transmission upgrades, but it does not address the key question of whether there is sufficient capacity to serve the identified large new data center load without imposing significant and unacceptable reliability and capacity related cost impacts on all PJM customers,” the filing said.
The market monitor recommended the TSA not be approved unless PECO can show that the new data center load “can be served reliably and economically.”
In the last two PJM capacity auctions for adequate generating capacity market costs “that affect all customers” totaled $30 billion with data centers accounting for $16.6 billion.
“This calculation does not include the impact on energy market costs which would also be substantial if large new data center loads are interconnected when PJM does not have the capacity to serve them,” the market monitor filing said.
PJM does not believe that under the current rules it does not have the authority to prevent the interconnection of large new data center loads even if it does not have enough capacity to reliably serve those loads, the filing said.
The market monitor argued that the PJM does have that power “but clarification is clearly need” from the FERC.
Monarch Energy Development, which is developing a data center in Illinois, to be served by Commonwealth Edison, filed comments in the Amazon docket urging that whatever decision the FERC makes will set precedent for future data centers.
The Amazon-PECO Energy decisions could have “significant regulatory and policy implications,” Monarch Energy said.
In Washington state, Amazon has unveiled plans for initial 320-MW small modular reactor complex to serve the company’s data centers in that region.
The project will be owned, built and operated by Energy Northwest just north of Richland, Washington, on land adjacent to the public power entity’s 1,207-MW Columbia Generating Station, the only commercial nuclear plant in the Pacific Northwest.
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