Amazon to spend $20 billion on two data center complexes in Pennsylvania

Amazon said on Monday that it will spend $20 billion on two data centre complexes in Pennsylvania, including one it is building alongside a nuclear power plant that has drawn federal scrutiny over an arrangement to essentially plug right into the power plant.

Kevin Miller, vice-president of global data centres at Amazon's cloud computing subsidiary, Amazon Web Services, told The Associated Press that the company will build another data centre complex just north of Philadelphia.

One data centre is being built next to northeastern Pennsylvania's Susquehanna nuclear power plant, where it intends to get its power. The other will be in Fairless Hills at a logistics campus, the Keystone Trade Centre, on what was once a US Steel mill. Amazon said that data centre will get its power through the electricity grid.

At a news conference in Berwick in the shadow of the power plant, Governor Josh Shapiro called it the largest private sector investment in Pennsylvania's history. Monday's announcement, he said, is "just the beginning" because his administration is working with Amazon on additional data centre projects in Pennsylvania.

While critics say data centres employ relatively few people and pack little long-term job-creation punch, their advocates say they require a huge number of construction jobs to build, spend enormous sums at area vendors and generate strong tax revenues for local governments.

Shapiro touted the work that will keep construction trades members busy building Amazon's data centres, the tech jobs that will be waiting for graduates of area colleges and the millions of dollars in property taxes that will flow to schools and local governments.

"For too long, we've watched as talents across Pennsylvania got hollowed out and left behind," Shapiro said at the news conference. "No more. Now is our time to rebuild those communities and invest in them. This investment in Pennsylvania starts reversing that trend."  Pennsylvania will provide possibly tens of millions of dollars in incentives, typically a key element of data centre deals as states compete for the large installations they hope will be an economic bonanza.

Shapiro's administration said it will spend $10 million to pay for training classes and facilities at schools, community colleges and union halls to meet the skills demand for the data centres.

Amazon also will qualify for Pennsylvania's existing sales tax exemption on purchases of data centre equipment, such as servers and routers, an exemption that most states offer and that is viewed as a must-have for a state to compete.

The announcements add to the billions of dollars in Big Tech's data centre cash flowing into the state.

Since 2024 started, Amazon has committed to about $10 billion apiece to data centre projects in Mississippi, Indiana, Ohio and North Carolina as it ramps up its infrastructure to compete with other tech giants to meet growing demand for artificial intelligence products.

The rapid growth of cloud computing and artificial intelligence has meanwhile fuelled demand for energy-hungry data centres that need power to run servers, storage systems, networking equipment and cooling systems.

The majority owner of the Susquehanna nuclear power plant, Talen Energy, last year sold its data centre and land adjacent to the plant to Amazon for $650 million in a deal to eventually provide 960 megawatts of electricity, likely at a premium. That is 40 per cent of the output of one of the nation's largest nuclear power plants, or enough to power more than a half-million homes.

Amazon is effectively gutting that data centre and building its own, larger facility on the land.

However, the power-supply arrangement between Talen and Amazon called a "behind the meter" connection has been held up by the Federal Energy Regulatory Commission in the first such case to come before the agency.

For Big Tech, plugging data centres directly into a power plant can take years off their development timelines and is a much faster route to procuring power than connecting to the congested electricity grid.

But it has raised questions over whether diverting power to higher-paying customers will leave enough for others and whether it is fair to excuse big power users from paying fees to improve the grid.

It is not clear when FERC, which blocked the deal on a procedural grounds, will decide the matter.

Already in Pennsylvania, Microsoft has a deal with the owner of the shuttered Three Mile Island nuclear power plant to restart a reactor under a 20-year agreement to supply its data centres in four states with energy.

Meanwhile, the owners of what was once Pennsylvania's biggest coal-fired power plant say they will turn it into a $10 billion natural gas-powered data centre campus.