In Chicago’s working-class Pilsen neighborhood, a 60s-era oil-fired power plant rises up from an industrial lot behind Dvorak Park, which in warmer weather is packed with children climbing on its colorful playground and zooming down slides.

The rarely-used eight-unit Fisk power plant owned by Houston-based NRG Energy was scheduled to retire next year. ‍But then came from artificial intelligence.

Prices shot up in the country’s biggest power market – PJM Interconnection – as electricity requests from data centres exceeded existing supplies, sounding the alarm over power shortfalls, and making Fisk and other plants like it suddenly profitable.

“We believe there’s an economic case to keep them around, so we withdrew the retirement notice,” ​said Matt Pistner, senior vice president of generation at NRG, of Fisk’s eight power-generating units.

The Fisk power plant is among a growing number of so-called “peaker” electric generating units being pressed into duty across the U.S. as the ‌nation’s electrical with growing demand from data centres powering Big Tech’s investments in artificial intelligence.

Peakers, which are meant to run only in short bursts during periods of spiking electricity demand, help stave off blackouts by supplying power on a moment’s notice. But ​there’s a trade-off: these often decades-old, fossil-fueled facilities emit more pollution when they are running and cost more to produce electricity than continuous power plants.

A Reuters analysis of filings with the country’s biggest power grid shows that about 60% of

oil, gas and coal power plants slated for retirement in PJM postponed or cancelled those plans this year. Most of the plants averting shutdowns are peaker units.

The Fisk peakers were built on the site of a now-defunct coal-fired electricity generating station that operated for over a century. After years of fierce opposition by local residents, the coal plant shut more than a decade ago, but eight peaking units that run on petroleum oil continue to operate on the site.

“When we found out that the coal plant was closing but there was still going to be power produced at the site, it was very disappointing,” said Jerry Mead-Lucero, a longtime advocate for the closure of the Fisk coal station who spent most of his adult life in Pilsen.

Following the coal plant closure, pollution plummeted, but it didn’t vanish. Sulfur dioxide ranged from about 2 to as much as 25 tons per year from the site, according to the Environmental Protection Agency, as the eight-unit peaker plant occasionally lumbered to life to feed the grid.

“That’s not an insignificant amount considering the low chimneys and homes nearby,” said Brian Urbaszewski, Director of Environmental Health Programs for Respiratory Health Association, an Illinois nonprofit ​that focuses on helping people with respiratory disease.

Because they were built for speed instead of efficiency, peakers often do not have pollution controls like mercury scrubbers, which remove the toxic chemical from the power plants’ emissions, and filters for particulate ⁠matter, according to academic and federal government research.

Some also have lower smokestacks, or chimneys, environmental advocates say, meaning pollution can be more concentrated locally.

Keeping peakers running longer may accelerate under U.S. President Donald Trump’s administration, which said it was exploring ways to , including peaker plants and other emergency systems, to quickly meet the massive new electricity demand.

“There are a ton of peaker plants that could operate more,” U.S. Energy Secretary Chris Wright told Reuters in an interview in September, adding that clean air regulations have kept more from running more frequently. “The biggest targets are spare capacity on the grid today.”

While peaker plants contribute about 3% of the country’s power, they have the total capacity to produce 19%, according to a report by ​the U.S. Government Accountability Office.

Tapping into that spare capacity, however, could mean more harmful emissions being spewed into neighborhoods ⁠that are often already overburdened with environmental hazards.

The country’s roughly 1,000 peaker plants are disproportionately located in low-income communities of color, according to academic and federal government research, meaning that extending the plants’ lives could leave vulnerable Americans to bear the brunt of more pollution.

A 2022 study of formerly “redlined” U.S. communities, which were cut off from financial services like mortgages for being predominantly Black or immigrant, found that residents were 53% more likely to have had a peaker plant built nearby since the year 2000 than in non-redlined areas.

“If you were a redlined neighborhood, you were more likely to have a fossil fuel power plant built nearby, and we saw that relationship was even stronger for peaker plants,” said UCLA professor of environmental health sciences Lara Cushing, who led the study.

Most of the country’s peaker ‌plants were built during two periods of growth in energy consumption: in the mid-20th century as electrical appliances became common household items, and at the turn of the millennium as the economy grew and computers gained popularity. Afterwards, as energy-sapping devices and infrastructure ‌became more efficient, U.S. power demand waned and many fossil-fired power plants shut.

Meanwhile, solar and wind farms, which only produce power when the sun is shining and the wind is blowing, began to supply more of the country’s energy.

“We’re kind of making the old system work harder and that’s part of why we’re seeing this increased use of plants operating as peakers,” said Frank Rusco, a director with the Government Accountability Office, which was directed by U.S. Congress, ‍at the urging of environmental justice groups, to study the use of peaker plants and how they intersect with American communities.

The study found that natural gas peaker plants emit 1.6 times more sulfur dioxide for each unit of electricity produced on a median basis compared to non-peaker plants.

Fisk is part of the nation’s largest electrical grid, PJM Interconnection, which stretches across 13 states and covers the world’s biggest concentration of data centres. Demand from AI data centres is threatening to engulf the grid’s power reserves, and it is already driving up prices.

Prices paid to power suppliers in PJM to ensure ‍plants run at times of spiking demand soared by more than 800% this summer, compared to a year earlier. That made owning peaker power plants much more lucrative.

“It is clear today, nationally, that electricity demand is outstripping supply – the market reflects this, and generators are responding,” PJM spokesman Jeff Shields said. “We cannot afford to lose existing generation while we continue to bring on new generation to keep pace with the electricity needs of data centers and other large loads powering the country’s economy.”

About 23 oil, gas and coal power plants in PJM territory were scheduled to retire starting in 2025 or shortly after, according to a Reuters analysis of letters sent to PJM Interconnection by power companies.

Since January, U.S. power companies, the grid operator, and the federal government have delayed or cancelled the retirements of 13 of those power plants, the letters showed. Of those plants that averted closure, 11 were peakers.

Among those delayed were the roughly 55-year-old units at the “Eddystone” plant outside of Philadelphia, owned by Constellation Energy, which were ordered to keep running by the Department of Energy. The Wagner peaker near Baltimore, meanwhile, was kept alive at the request of PJM while the grid operator coordinates on the transmission needed for the removal of the generator.

Many of the retained power plants were built as peakers, while others were initially intended to be around-the-clock power, but later downgraded to run only during emergencies.

Fisk owner NRG Energy says peakers are essential safeguards for the grid that are being called on more often not just for data centres but for the electrification of manufacturing and transportation, and to avert blackouts caused by increasingly severe winter storms and summer heatwaves.

Having the Fisk peakers in the city means that Chicago doesn’t need to import electricity in the case of an emergency when outside power sources go down.

“They ⁠really are the last line of defense, and the shock absorber, for the system,” said Matt Pistner of NRG Energy. “When they’re needed, there is no other place to go.”

While NRG has owned power generating sources from nuclear energy to wind and solar, oil-fired peakers add another layer of certainty by ensuring the power fuel source can be stored on site, Pistner said.

“During its run times, the power plant consistently operates within federal and state environmental regulations — and we ​are proud of its record,” an NRG spokesman told Reuters separately.

Energy experts say there are alternatives to peakers. Investing in more robust transmission lines could transport electricity from parts of the country with oversupplies of power to those with shortfalls.

“If we do that, the system would run more efficiently and you ⁠would probably have a reduction in the amount of reliance on peakers,” said the GAO’s Rusco.

Batteries, which are undergoing technological improvements to store power for longer, could also replace many peaker units, according to clean energy advocates.

In the meantime, as AI power demand rises, communities like Pilsen, which have successfully fought to close some pollution sources in recent history, may find peaker plants more difficult to fight.

“It all adds up to significant cost increases for electricity consumers and significant increases in local pollution and will prevent new clean energy generation from connecting to the grid,” said John Quigley, of the University of Pennsylvania’s Kleinman Center for Energy Policy

PJM said it would continue to connect carbon-free renewable power, nuclear and gas-fired energy to the grid regardless of whether peakers stay on longer.

“We need every single megawatt of energy we can get right now,” Shields said. Deactivating existing power plants, he added, “ignores reality.”

Northern Illinois is a budding data centre market, with at least one data centre already operating in Pilsen and multiple other energy-intensive projects planned for nearby areas, including a 20-building campus ⁠announced this year by T5 Data Centres.

Mead-Lucero worries that the Fisk peaker units will continue the legacy of environmental hazards plaguing his hometown, which also sees emissions from industrial truck traffic, a metal scrapper and a major highway cutting through the neighborhood. “You add all of these compounding factors, and you end up with a real problem again.”

Meta said it will take submissions from developers that want to take part in the request for proposals until January 3, 2025 [File]
| Photo Credit: REUTERS

Meta said on Tuesday it is seeking proposals from nuclear power developers to help meet its artificial intelligence and environment goals, becoming the latest big tech company to take interest in atomic power amid an expected boom in electricity demand.

The company wants to add 1 to 4 gigawatts of new U.S. nuclear generation capacity starting in the early 2030s, it said in a release. A typical U.S. nuclear plant has a capacity of about 1 gigawatt.

“At Meta, we believe nuclear energy will play a pivotal role in the transition to a cleaner, more reliable, and diversified electric grid,” the company said in a release.

U.S. data center power use is expected to roughly triple between 2023 and 2030 and will require about 47 gigawatts of new generation capacity, according to Goldman Sachs estimates.

But it will be tough to swiftly meet soaring power demand with nuclear reactors, as companies face an overburdened U.S. Nuclear Regulatory Commission, potential uranium fuel supply obstacles and local opposition.

Microsoft and Constellation Energy announced a deal in September to restart a unit at the Three Mile Island plant in Pennsylvania in what would be the first-ever restart for a data center.

That announcement followed a similar agreement in March in which Amazon.com, purchased a nuclear-powered data center from Talen Energy.

Meta said it is seeking developers with expertise in community engagement, development and permitting, and would consider either small modular reactors, an emerging part of the business that is not yet commercial, or larger nuclear reactors similar to today’s fleet of U.S. nuclear plants.

Meta said it will take submissions from developers that want to take part in the request for proposals until January 3, 2025.

The company said it was using the request-for-proposal process because, compared to renewable energy projects like solar and wind, nuclear is more capital-intensive, takes longer to develop, and is subject to more regulatory requirements.

“An RFP process will allow us to approach these projects thoroughly and thoughtfully with these considerations in mind,” it said.

Constellation said it is seeking guidance from regulators after FERC’s decision about co-location [File]
| Photo Credit: REUTERS

Constellation Energy will continue to pursue deals to develop data centres on the sites of its U.S. power plants, days after federal regulators dealt a blow to the so-called co-located arrangements, company executives said on Monday.

The Federal Energy Regulatory Commission on Friday rejected an agreement to increase the power capacity of an Amazon data centre connected directly to Talen Energy’s nuclear power plant in Pennsylvania in a decision seen as chilling similar deals.

Constellation said it is seeking guidance from regulators after FERC’s decision about co-location, which had become a promising prospect for Big Tech’s plans to quickly access large amounts of power for its AI expansion instead of waiting for years to connect to the grid.

“We will pursue this regular clarity while simultaneously pursuing commercial strategies for co-location that are permitted under our existing rules,” Constellation CEO Joseph Dominguez said on a company earnings call.

Dominguez outlined what future co-located agreements would look like, including that nuclear energy directly fueling data centres be required to switch over to powering the grid in times of supply emergencies and that backup power for the centers could be sold back to the regional market. “There are multiple regulatory and commercial pathways to resolve the co-location issues, and we will work quickly with customers and other stakeholders to put these in place.”

Constellation, which is the largest operator of U.S. nuclear power plants, had backed Talen in the regulatory battle. Shares of the nuclear power operators had shot up this year partly on the prospect of developing co-located data centres.

Constellation stock was down about 10% on Monday.

The FERC fight was brought by electric utilities Exelon and American Electric Power, which opposed the Talen-Amazon data centre interconnection agreement, saying that it threatened to raise power bills for everyday customers and erode grid reliability.

Talen’s Susquehanna nuclear-powered data centre campus, sold to Amazon this year, would have the capacity of 960 megawatts, or enough electricity for all of the homes in Philadelphia.

In a 2-1 vote, FERC shot down Talen’s request to expand the capacity of data center beyond 300 megawatts. The vote followed a FERC technical conference to discuss broader concerns about co-locating data centres.

Diverting that electricity, which currently flows from the nuclear plant to the broader grid, could unfairly shift costs to the public and worsen a supply-demand imbalance in the PJM Interconnection regional power market, the majority of voting commissioners said.

Talen Energy, in a statement posted to its website on Sunday, said it would consider various methods to quickly power up data centres.

“The data center economy will require an all-of-the-above approach to satisfy the increased demand, including co-location,” the company said.

Nuclear power, which generates electricity virtually free of greenhouse gas emissions and provides high-paying union jobs, gets wide support from both Democrats and Republicans [File]
| Photo Credit: REUTERS

Amazon.com said on Wednesday it has signed three agreements on developing the nuclear power technology called small modular reactors, becoming the latest big tech company to push for new sources to meet surging electricity demand from data centres.

Amazon said it will fund a feasibility study for an SMR project near a Northwest Energy site in Washington state. The SMR is planned to be developed by X-Energy. Financial details were not disclosed.

Under the agreement, Amazon will have the right to purchase electricity from four modules. Energy Northwest, a consortium of state public utilities, will have the option to add up to eight 80 MW modules, resulting in a total capacity up to 960 MWs, or enough to power the equivalent of more than 770,000 U.S. homes. The additional power would be available to Amazon and utilities to power homes and businesses.

“Our agreements will encourage the construction of new nuclear technologies that will generate energy for decades to come,” said Matt Garman, CEO of Amazon Web Services.

SMRs will have their components built in a factory to reduce construction costs. Today’s larger reactors are built onsite. Critics of SMRs say they will be too expensive to achieve the desired economies of scale.

Nuclear power, which generates electricity virtually free of greenhouse gas emissions and provides high-paying union jobs, gets wide support from both Democrats and Republicans. But no U.S. SMRs exist yet. NuScale, the only U.S. company with an SMR design license from the U.S. Nuclear Regulatory Commission, last year had to axe the first SMR project to build its technology at a U.S. lab in Idaho.

In addition, SMRs will produce long-lasting radioactive nuclear waste for which the U.S. does not yet have a final repository.

Scott Burnell, a spokesperson at the U.S. NRC, said “no specifics” about the planned SMRs been presented yet to the regulator.

Data centres

Tech firms have signed a rash of agreements with nuclear companies this year as artificial intelligence boosts U.S. power demand for the first time in decades, though time-lines for nuclear projects tend to lag goals by years.

U.S. data centre power use is expected to roughly triple between 2023 and 2030 and will require about 47 gigawatts of new generation capacity, according to Goldman Sachs estimates. Goldman assumed natural gas, wind and solar power would fill the gap.

Amazon said it is also leading a funding round for $500 million to support X-Energy’s development of SMRs. Amazon and X-Energy aim to bring more than 5 gigawatts online in the United States by 2039, which the companies call the largest commercial deployment target of SMRs yet.

Amazon also signed an agreement with Dominion Energy to explore the development of an SMR project near the utility’s existing power station in Virginia. The about 300 megawatt project would help meet power needs in a region where demand is expected to jump 85% in 15 years, Dominion said.

U.S. Senator Mark Warner said at an event held at Amazon offices in Virginia that recent announcements could “crack the code” in getting U.S. SMRs built.

Warner said he often talks with parties in other countries who are interested in buying SMRs from U.S. companies but wary that none have been built in the U.S. On Monday Alphabet’s Google signed an agreement with Kairos Power to bring an SMR online by 2030, with more deployments through 2035.

In March, Amazon purchased a nuclear-powered datacenter from Talen Energy. Last month, Microsoft and Constellation Energy signed a power deal to help resurrect a unit of the Three Mile Island plant in Pennsylvania, the site of the worst U.S. nuclear accident in 1979.