September 04, 2024
🍁 The unofficial end of summer is upon us, but pumpkin spice lattes are already old news.
- Next week: We'll be back in your inbox four days a week as lawmakers return to D.C.!
💻 Join Axios Pro next week for a series of virtual conversations and live Q&As unpacking the policy impacts of the 2024 election. Nick and Daniel will be live Tuesday at 2:30pm ET.
🎤 Today's last song is from Sufia Alam, a climate and energy communicator at Third Way: "Big Dawgs" by Hanumankind. He's the first Indian rapper to make the Billboard top 10, briefly surpassing even Kendrick's epic diss track.
1 big thing: Amazon's nuclear test case for FERC
Federal energy regulators are weighing whether to allow an Amazon data center to tap an existing nuclear power plant in Pennsylvania in a test case for U.S. energy regulators, Daniel reports.
Why it matters: The first-of-its-kind agreement between Amazon and Talen Energy could be a roadmap for other data centers seeking the constant zero-carbon electricity supplied by nuclear reactors.
- Amazon sees the deal to co-locate with Talen's 2.5-gigawatt Susquehanna nuclear plant as a creative near-term way to meet its climate goals.
Friction point: Neighboring utilities Exelon and AEP argue that the agreement would enable Amazon to escape fees that other customers pay, shifting about $140 million to the rest of the grid at a time when prices for power plant capacity in the region are sharply rising.
- The utilities are pressing the Federal Energy Regulatory Commission to hold a hearing on the matter.
- FERC has asked Talen Energy for more information. It has also scheduled a Nov. 1 conference on the co-location of data centers, acknowledging the issue has become a broader concern.
The big picture: The deal comes as PJM Interconnection — a regional grid covering 13 states and the District of Columbia — reported an 800% price spike in July in consumer payments to generators to secure enough future power capacity to meet demand.
- The cost to consumers is real, said Colette Honorable, a former FERC commissioner who now lobbies for Exelon, the largest U.S. utility by customer count.
- Baltimore-area Exelon customers, for example, face a $18 increase in residential monthly electricity bills just from the capacity charges, she said.
- The grid is in an "unprecedented and historic moment," she said, and "it's imperative that the commission take a moment to give us the rules of the road."
The other side: Amazon declined an interview request, but said in a statement that its nuclear deal is part of its goal to reach net-zero carbon emissions by 2040.
- "To supplement our wind and solar energy projects, which depend on weather conditions to generate energy, we're also exploring new innovations and technologies, and investing in other sources of carbon-free energy," the company stated.
- "Our agreement with Talen Energy for carbon-free energy is one project in that effort."
- Talen denies the arrangement will strain the grid. "It brings service to a new customer load quickly, which has arrived and is significant," the company said in a statement.
Between the lines: If regulators approve the Amazon-Talen tie-up, other companies could replicate it to avoid lengthy permitting timelines, said Todd Snitchler, head of the Electric Power Supply Association, which represents Talen Energy and other independent power producers.
2. Virginia's growing data center wait times
Virginia's top energy official is weighing how to help after Dominion Energy said new large customer connections to the grid could stretch as long as seven years, Daniel reports.
Why it matters: The timelines are the latest sign that Virginia, which is by far the world's largest data center market, is struggling to keep up with the volume and size of service requests from the energy-guzzling facilities.
- A one-to-three-year wait extends the typical three to four years the large customer connection process has previously taken, Dominion said.
- The extension has been the "reality for some time," said Joe Woomer, an executive with Dominion Energy Virginia.
Between the lines: Virginia Gov. Glenn Youngkin's administration is still trying to assess the utility's problems and how it can help reverse the trend.
- "We have to keep an affordable, reliable and abundant energy grid, and that includes being able to get people, to get companies and data centers attached to the grid in a timely manner," Glenn Davis, director of the Virginia Department of Energy, told Axios.
- "It's something that the governor is aware of, is concerned about, and we're being very proactive."
Driving the news: The increasing size and quantity of large-scale requests result "in an extension of planning analysis and project execution lead times" for new service requests on its transmission system, the utility wrote in a letter sent to customers last week.
- The utility said it's working on solutions, including a web-based portal this year and plans to study service requests in regional batches throughout the year.
- "We are continuing to connect at a record pace and a record capacity," Woomer said.
3. Catch me up: Solar plan, permitting and the OIG
🛢️ 1. At lease we'd have oil: A fresh analysis from RFF shows just how much uncertainty is involved in measuring the emissions impact of the Manchin permitting bill.
- The high oil and gas leasing scenario in the analysis could increase global emissions by 1.2 gigatons of CO2 equivalent through 2050.
- But RFF's Brian Prest writes that his estimates "should be considered a high upper bound" of the permitting bill's impacts, "with expectations that the actual emissions effects would be lower."
☀️ 2. Sunny skies: The Bureau of Land Management last week proposed to open 31 million acres of public land to solar development as part of its Western Solar Plan.
- That's even more than its initial proposal this year, which was already drawing sharp rebuke from Hill Republicans.
👀 3. Too big for your breaches: EPA's inspector general found Air and Radiation chief Joe Goffman violated federal ethics rules by participating in rulemakings that could affect his financial interests.
- EPW Ranking Member Shelley Moore Capito said the report "raises serious questions and concerns" about his impartiality. (Goffman has disputed the findings.)
📝 4. GAO fish: House Natural Resources Democrats requested a series of GAO studies on orphaned wells, oil and gas leasing and geothermal permitting on federal lands.
✅ Thank you for reading Axios Pro Policy, and thanks to editor David Nather and copy editor Brad Bonhall.
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