Talen Energy has restructured and significantly expanded its nuclear energy agreement with Amazon Web Services (AWS), finalizing a 17-year, $18 billion power purchase agreement (PPA) that will supply up to 1,920 MW of carbon-free electricity from the 2.5-GW Susquehanna nuclear plant to Amazon’s data centers across Pennsylvania.
The deal, announced on June 11, restructures a previously approved co-located behind-the-meter (BTM) model into a grid-connected, front-of-the-meter (FTM) retail structure. Under the new arrangement, Talen, an independent power producer (IPP), will serve as AWS’s licensed retail electricity provider in Pennsylvania, enabling it to source power from the grid and contract directly with AWS. PPL Electric Utilities will deliver the power across the grid, while generation from the two-unit, 2.5-GW Susquehanna nuclear plant will be injected into PJM Interconnection. The reconfiguration will take place during a scheduled refueling outage in spring 2026. Until then, Talen will continue powering the campus under the existing 300-MW BTM setup.
The restructured PPA, which will run through 2042, outlines a staged ramp-up in carbon-free electricity deliveries from the Susquehanna nuclear plant to AWS’s data center campuses across Pennsylvania. Under the contract, deliveries are slated to reach between 840 MW and 1,200 MW by 2029, and between 1,680 MW and 1,920 MW by 2032, depending on AWS’s development pace. According to Talen executives, the full contracted volume is expected to be achieved “no later than 2032,” though both parties have indicated it could be met sooner.
A Strategic Pivot After FERC’s Rejection
The news comes on the heels of Amazon’s announcement on June 10 that it plans to invest at least $20 billion in Pennsylvania to expand its artificial intelligence (AI) infrastructure. The landmark investment, which Amazon calls the largest private sector commitment in Pennsylvania’s history, will initially focus on new data center campuses in Salem Township and Falls Township, with additional communities under consideration.
During an investor call on June 11, Talen executives said the revised agreement with AWS was necessary to navigate regulatory headwinds created by the Federal Energy Regulatory Commission’s (FERC’s) November 2024 rejection of an amended interconnection service agreement (ISA) that would have enabled AWS to expand its direct, behind-the-meter (BTM) load at the Susquehanna nuclear site.
As POWER reported in November, FERC denied the PJM-filed amendment on a 2–1 vote, citing fairness and reliability concerns. The proposed amendment would have increased the co-located load at Susquehanna from 300 MW to 480 MW and allowed for future growth up to 960 MW, but opponents—including AEP and Exelon—warned the model could allow large load customers to sidestep costs borne by other grid users. FERC ultimately agreed, concluding that PJM had not justified its deviation from established transmission rules.
Because power is delivered via standard grid channels, the new approach directly responds to FERC’s concerns while simplifying approvals, noted Talen CEO Mac McFarland. And, while it does not require a special FERC-approved amendment to the ISA, it also ensures transparent cost allocation. AWS, as a retail customer, will pay all applicable transmission and distribution charges, eliminating the risk of shifting costs to other ratepayers, which was a central concern in FERC’s 2024 rejection, he said. “And, as PPL has said numerous times, this will reduce transmission costs for residential customers. Everyone benefits,” he said.
The agreement will also support AWS’s build-out of multiple hyperscale data center campuses across Pennsylvania, including a flagship facility adjacent to the Susquehanna site in Luzerne County. As a signal of confidence in the grid-connected model, “Amazon is forgoing its option to limit the campus and PPA at 480 MW—an important commitment to accelerating the campus to its full potential,” noted Cole Moeller, Talen’s executive vice president of strategic ventures.
As notably, Talen’s revised agreement with AWS also includes the termination of the Nautilus lease, a legacy arrangement tied to a bitcoin mining facility and PPA that previously occupied part of the Susquehanna site and locked up nuclear capacity at below-market rates. “We will also terminate the Nautilus lease, unlocking more land and infrastructure to quickly power the Amazon campus,” said Cole Moeller, Talen’s executive vice president of strategic ventures.
To protect Talen’s downside in the event of a slower-than-expected AWS buildout, the agreement mirrors the previous deal’s structure by including minimum volume commitments that scale over time. “Just like the first deal that we did, there are minimum commitments that ramp over time through 2032 here to the full max—or full main—commitment,” Moeller explained. “And if they’re not met, there’s a payment to make us whole, relative based on the market price at that time versus the contract price,” he said. “Just like the first deal, there is a cap to those should that difference be great enough over a period of time based on the minimum commitments for that year.”
While the contract is structured to prioritize nuclear power from the Susquehanna plant, it also includes operational safeguards to ensure reliability. “This is a contract where we are supplying nuclear, carbon-free energy, and that’s the objective of the contract,” said Talen CEO Mac McFarland. “However, if a unit is in an outage or is enforced out, it can be backstopped by the rest of our fleet, but that isn’t the intent. And so we can supply the energy, but carbon-free, it has to come from the nuclear plant. But that, you know, is a smaller component than the overall energy and capacity. So that’s why we get the portfolio effect. But let’s just be clear: We’re trying to generate as many megawatts to supply this contract out of the nuke.”
“Rather than challenge the FERC order or slow down our development, we restructured the contract,” Moeller explained. “We will now serve AWS as a retail supplier and deliver power across the grid to any AWS facility in Pennsylvania. That’s a better model, and it allows for acceleration.”
Moeller also noted that the retail structure enables flexible power delivery aligned with AWS’s infrastructure pace: “Amazon has the flexibility with this contract to flex the PPA across all of its sites across Pennsylvania, and we think that meaningfully gives opportunity for acceleration,” he said. “So the opportunity to build multiple campuses in parallel and power them through this PPA provides a lot of upside opportunities for us.”
The Integration Flashpoint: Rethinking How Large Loads Connect
The Talen-Amazon agreement arrives at a moment of historic strain for PJM and other U.S. grids, as electricity demand from data centers and AI-driven infrastructure is forecast to accelerate dramatically. PJM—whose footprint spans 13 states and the District of Columbia—has revised its long-term forecasts to reflect surging demand growth across multiple zones. In the PPL zone, which includes parts of Pennsylvania such as Luzerne County (home to the Susquehanna plant and Amazon’s flagship data center campus), data center and large load growth is projected to add more than 1,800 MW of new peak demand by 2034, PJM said in its January 2025–released 2025 Load Forecast Report. The Dominion zone in Virginia—known as “Data Center Alley” and already home to the nation’s largest concentration of hyperscale data centers—is expected to see over 10,500 MW of new peak demand over the same period. Other zones—such as APS in Maryland and the ATSI zone in Ohio—are also forecast to add more than 500 MW and 740 MW, respectively, of large load.
That surge in demand, however, has also intensified scrutiny of how new data center load is integrated into the grid. The flashpoint is centered on when large customers seek to bypass conventional transmission planning and cost allocation by co-locating directly with generation sources. That practice, often framed as “behind-the-meter” or “non-network” load development, has raised concerns from grid operators, utilities, and regulators who argue that even ostensibly self-supplied data centers still rely on the broader grid for backup, balancing, and reliability services.
In February 2025, FERC launched a review of issues associated with co-location of large loads at generators with PJM and has set out to decide whether the PJM tariff needs to establish rules to create clarity while ensuring grid reliability and fair costs to consumers. In effect, it opened a show cause proceeding consolidating FERC’s November 2024 technical conference on large loads co-located at generating facilities (No. AD24-11-000), Constellation Energy Generation’s complaint against PJM regarding lack of co-location rules (No. EL25-20-000).
PJM submitted its comprehensive response on March 24, 2025, taking a notably different approach than expected: Rather than proposing specific new co-location rules, PJM argued its existing tariff remains “just and reasonable” while acknowledging that “improvements and clarifications may be appropriate based on Commission guidance.” The grid operator warned that prematurely locking in a co-location policy could undermine flexibility as load and siting pressures evolve.
The three existing pathways—available now under PJM rules—include: (1) grid-connected load served through a separate point of interconnection as network load; (2) co-located load and generation using the same point of interconnection, but with separate metering; and (3) traditional behind-the-meter generation serving an onsite customer. The five conceptual models span a broader range of arrangements, including limited grid backup with protective relaying to avoid energy delivery (Options 4 and 5), network load status for loads bringing their own generation (Option 6), interruptible service for non-capacity-backed loads (Option 7), and participation in demand response markets (Option 8).
Stakeholder reaction was swift. The Electric Power Supply Association (EPSA), a trade group for competitive generators, and the PJM Power Providers Group (P3), a non-profit dedicated to advancing policies that promote well-functioning power markets, jointly filed comments on April 23, 2025, strongly opposing PJM’s position. They argued that PJM’s tariff is inadequate for addressing co-location and urged FERC to initiate a 90-day settlement process to develop concrete rule changes that remove current barriers. The PJM Independent Market Monitor also weighed in, echoing concerns about cost shifting, particularly if co-located load is permitted to avoid transmission or capacity charges while still relying on grid services, noting that “cross-subsidization of colocated load by other load or market participants should not be permitted.”
The Data Center Coalition—whose members include Amazon, Google, and Microsoft, countered that PJM’s current rules are overly rigid and ambiguous, discouraging investments in co-located, lower-carbon generation that could enhance reliability and support decarbonization goals. “Co-location is a commercial arrangement—not a system problem,” it said. “The increased scrutiny of co-located load in the PJM footprint is not primarily about the nature of the arrangement itself. Rather, it reflects growing concern about tightening resource adequacy margins, interconnection queue delays, an increasingly congested transmission grid, and the adequacy of grid operators’ planning tools in the face of rapid demand growth.” Numerous additional comments—filed by developers, utilities, and advocacy groups—highlighted unresolved questions about cost allocation, grid impacts, and regulatory jurisdiction.
Talen Energy, in comments filed April 23, 2025, supported PJM’s decision not to propose new tariff rules for co-located load, arguing that “co-location and behind-the-meter structures have long coexisted with wholesale markets” and that a rigid rulemaking could “unintentionally hinder investments in generation and energy infrastructure.” On Wednesday, it clarified that while it has been working on regulatory/legal solutions after FERC’s ISA amendment rejection last fall, its new agreement with Amazon is a “commercial solution.”
Talen intends to “continue to work on regulatory [and] legal options to preserve behind-the-meter co-location, as we believe this needs to be part of the all-of-the-above solution set to solve growing demand,” said McFarland on Wednesday. “With respect to the new contract, we have taken the feedback of the technical sessions at FERC and feedback from constituents.”
Generating Up to $1.4B in Annual Revenue
As a whole, the Talen-Amazon deal offers a potentially replicable model for merchant generators looking to secure long-term revenue through large-load retail delivery rather than volatile market exposure. It also offers a framework for integrating nuclear power, traditionally viewed as inflexible or high-cost, into the fast-moving world of hyperscale infrastructure, company executives suggested on Wednesday.
According to Talen, the PPA is expected to generate up to $1.4 billion in annual revenue once the full contract quantity of 1,920 MW is reached—an estimate that reflects the fully ramped contract volume and incorporates annual price escalators of 2% beginning in 2028, as detailed in the investor presentation footnotes. The company projects the contract will drive a 50% increase in after-tax cash flow per share compared to 2026 guidance—reaching more than $8 per share by 2030–2032—and deliver a 20% compound annual growth rate from 2024 levels.
But as significantly, the deal is poised to fundamentally transform Talen’s business profile. Today, Talen’s functions as an IPP that holds 10.7 GW of generation across the U.S., including 2.2 GW of nuclear power and 6.3 GW of dispatchable gas and oil. The company primarily sells electricity, capacity, and ancillary services into competitive wholesale markets—chiefly PJM—through a mix of bilateral contracts, capacity auctions, and hedging strategies. The Susquehanna nuclear station, which Talen owns and operates, supplies nearly half its total generation.
The new agreement marks a notable expansion. While CEO Mac McFarland did not explicitly call the move a retail market pivot, he described it as the start of a fundamentally “differentiated IPP model.” Talen is leveraging “our core IPP skills, risk and commodity management, and delivering a full-service retail contract for Amazon that they can use across their sites in Pennsylvania as well as Susquehanna,” he said. “And we believe this new agreement provides a new solution, in addition to the original behind-the-meter solution, one that is repeatable across our portfolio.”
The “differentiated IPP model” essentially points to an “IPP anchored by this new $18 billion notional value, 17-year contract with line of sight for large-scale, contracted revenue streams that provide for resilient, and significant, growing free-cash flow, which drives an improved balance sheet and enhances our capital allocation and strategic flexibility,” he said. It also “provides a roadmap of how we can generate incremental value in the future,” McFarland added.
Nuclear Innovation: Uprates and Small Modular Reactors
On Wednesday, Talen executives also revealed that, as part of the broader agreement, AWS and Talen have committed to exploring advanced nuclear technology development across the company’s Pennsylvania nuclear footprint.
As part of the deal, the two companies have agreed to jointly evaluate adding potential new capacity at Susquehanna, a nuclear plant that has been operating since the 1980s. “We are working together to evaluate potential plant uprates, as well as the potential deployment of small modular reactors (SMRs) on or near our sites,” said Moeller. “And that really reflects a platform of collaboration, shared values, and a common mission. And as we begin to think through long-term solutions together, we see nuclear innovation—uprates, SMRs, firm power—as part of the vision to decarbonize and meet the scale of energy demand these facilities will require.”
While still preliminary, the initiative points to growing momentum behind advanced nuclear as a power source for hyperscale digital infrastructure. McFarland framed the company’s long-term strategy around a phased development horizon: “We sort of see things as, you know, the short term, five years, midterm, five years, and then longer term, what happens years 11 through 15, and SMRs [are in] years 11 through 15. But you have to start at some point,” he said.
That strategic vision underpins the agreement with AWS to begin evaluating SMR deployment at Talen-owned sites in Pennsylvania. “And so we’ve agreed with Amazon to explore putting SMRs at our sites across Pennsylvania—but it’s the start of that. We’re not into making a capital commitment, but obviously, this is why,” McFarland continued. “Both in terms of that—the longer-term solution that’s years 11 through 15—as well as the gas solution that is going to be needed in the years five through or six through 10.”
Stakeholder Support Signals Broad Alignment
The revised agreement has garnered strong support from key stakeholders across the state.
PPL Electric Utilities, which will deliver power under the new retail arrangement, affirmed that the deal benefits all customers in its service territory. “Connecting large load customers like data centers to our transmission system helps lower the transmission component of energy bills for all customers, as large load customers pay significant transmission charges on our network,” said Christine Martin, president of PPL Electric Utilities. “We’re excited to be part of Amazon’s broader investment in Pennsylvania and look forward to the positive effects it can have for our customers and the local economy.”
AWS, too, expressed its support. “Amazon is proud to help Pennsylvania advance AI innovation through investments in the Commonwealth’s economic and energy future,” said AWS Vice President of Global Data Centers Kevin Miller. “That’s why we’re making the largest private sector investment in state history – $20 billion – to bring 1,250 high-skilled jobs and economic benefits to the state, while also collaborating with Talen Energy to help power our infrastructure with carbon-free energy.”
Pennsylvania Governor Josh Shapiro welcomed the announcement, calling it “a big deal for Northeast Pennsylvania and another sign that Pennsylvania is open for business.” He added: “We are bringing together world-class companies, innovative energy solutions, and good-paying jobs to grow the economy and create opportunity.”
Labor leaders and local officials also praised the deal’s economic and energy implications. “This announcement is good for family-sustaining jobs, our local communities, and Pennsylvania’s energy future,” said Dave Derbes, business manager of IBEW Local 1600. “We’re proud to support the continued operation and potential expansion of nuclear energy in Luzerne County and across the Commonwealth.” Luzerne County Manager Romilda Crocamo added: “The future of the Susquehanna station and data center development is critical to Luzerne County’s economy and long-term prosperity. We look forward to continuing to work with Talen and AWS to ensure sustainable growth in the region.”
—Sonal Patel is a POWER senior editor (@sonalcpatel, @POWERmagazine).
