HARRISBURG, Pa. (AP) – On Monday, Amazon announced plans to invest $20 billion in two data center complexes in Pennsylvania. Federal scrutiny primarily focuses on a direct connection to the power plant.
Kevin Miller, vice president of global data centers at Amazon Web Services, a subsidiary of Amazon involved in cloud computing, informed The Associated Press that the company will be establishing another data center complex just north of Philadelphia.
One of the data centers is under construction adjacent to the Susquehanna Nuclear Power Plant in northeastern Pennsylvania, where Amazon intends to source electricity. The second complex is located at Fairless Hills within the Keystone Trade Center, a logistics hub that formerly housed a US steel factory. Amazon plans to procure power for this center through the existing power grid.
At a press conference in Berwick, near the power plant, Governor Josh Shapiro described this as the largest private sector investment in Pennsylvania’s history. He mentioned that the announcement made on Monday is just the beginning, as his administration collaborates with Amazon on an additional data center initiative in the state.
Critics argue that data centers offer relatively few jobs and deliver only a modest long-term job creation effect. However, proponents assert that these projects necessitate a significant number of construction jobs, inject substantial funding into local businesses, and yield strong tax revenues for local governments.
Shapiro emphasized the construction jobs being generated by building Amazon’s data centers, highlighting graduates from local universities and the technology job opportunities that accompany millions of dollars in property taxes flowing to schools and local entities.
“For too long, we’ve watched Pennsylvania talent dwindle and be left behind,” Shapiro stated during the press conference. “That trend is over. Now is the moment to rebuild and invest in these communities. This investment in Pennsylvania will begin to turn that tide.”
Pennsylvania is offering incentives potentially worth tens of millions of dollars. Typically, essential elements of a data center are State competes for large installations, hoping this will be a boon for the economy.
The Shapiro administration announced it would allocate $10 million to fund training programs and facilities at schools, community colleges, and union halls to satisfy the skill requirements of data centers.
Additionally, Amazon qualifies for Pennsylvania’s existing sales tax exemption on data center equipment purchases, such as servers and routers, a common exemption across most states considered vital for competitive positioning.
This announcement adds to the multibillion-dollar influx of Big Tech data centers into the state.
Since the beginning of 2024, Amazon has invested around $10 billion into data center projects. Mississippi, Indiana, Ohio, and North Carolina are also ramping up their infrastructure to compete with other tech giants in fulfilling the rising demand for artificial intelligence products.
The swift expansion of cloud computing and artificial intelligence has increased the need for data centers that consume large amounts of energy to operate servers, storage systems, networking gear, and cooling systems.
Talen Energy, the principal owner of the Susquehanna Nuclear Power Plant, sold land adjacent to the data center and factory to Amazon last year, which will ultimately supply 960 megawatts of electricity. This amount can power 40% of production from one of the country’s largest nuclear plants, servicing over half a million homes.
Amazon is effectively utilizing this land for its data centers, constructing larger facilities.
However, the arrangement for power supply between Talen and Amazon, known as the “behind the meter” connection, received approval from the Federal Energy Regulation Commission, marking the first instance of such a case to come before the agency.
For major tech firms, tying data centers directly to a power plant can significantly shorten the development timeline compared to connecting to a congested grid, offering a more expedited electricity procurement route.
Nonetheless, this raises concerns about whether the diversion of electricity to high-paying clients is sustainable for others and whether it is fair for large power users to subsidize the costs of the grid. It is still unclear when FERC will reach a decision regarding the procedural block on the transaction.
Microsoft is already operating in Pennsylvania, engaging in a partnership with the shuttered Three Mile Island Nuclear Power Station whereby nuclear reactors will be resumed under a 20-year agreement to provide energy for data centers across four states.
Currently, the previously owned largest coal-fired power plant in Pennsylvania is set to transform into a $10 billion natural gas-powered data center campus.
___
Follow Marc Levy on X. https://x.com/timelywriter.
Source: apnews.com