Last week in Davos, newly sworn-in President Donald Trump expressed support for co-located, behind-the-meter energy generation for data centers. He said he would expedite regulatory approvals — and categorized the setup as “largely my idea.”
Trump’s embrace of the fairly in-the-weeds approach to powering data centers — an approach the industry has toyed with for years — reflects the tech industry’s own renewed enthusiasm for colocation. In the face of significant development headwinds such as interconnection bottlenecks and access to power, there’s hope that behind-the-meter solutions can offer a faster fix for AI’s massive power needs.
To date, however, there have been more conversations and proposals than firm projects.
One exception is Amazon Web Services, which made one of 2024’s most high-profile moves to behind-the-meter power when it acquired a data center campus in Pennsylvania from Talen Energy, for $650 million. That deal included a ten-year power purchase agreement for Talen to power the campus from the co-located Susquehanna nuclear power plant — circumventing the grid altogether.
Amazon’s subsequent request to increase the amount of power its newly acquired data center could receive behind the meter, from 300 megawatts to 480 megawatts, was rejected by the Federal Energy Regulatory Commission.
But the Talen deal, despite its high profile nature, isn’t really representative of AWS’ broader data center power strategy, Brandon Oyer, who leads carbon-free energy procurement for Amazon’s data centers, told Latitude Media.
“What you’ve seen over the past year of [Amazon] and other companies doing deals that are a little bit different was more of a reaction of needing speed to market,” Oyer explained, classifying the Talen deal as “sort of experimentation.”
“We’ve pushed some boundaries,” he added. But on the whole: “Our strategy is to get back to being grid-tied.”
Amazon was “quite happy” with the pre-AI boom days, Oyer said, in which the company could sign a PPA to bring renewables onto the grid. That meant the company could focus its time and resources on its “core technology” — cloud computing — rather than handling its own energy procurement as well.
“We think that the greatest benefit to our business, to the grid, to society as a whole, is to invest in the grid,” Oyer added. “We would love to get back to that point where the grid can handle the growth.”
The appeal of the grid
One key reason to be tied to the grid, Oyer said, is access to “pooled” energy resources, including those that go beyond traditional wind and solar power. Particularly appealing, at least when it comes to “firm, carbon-free sources of energy,” is nuclear.
In October, Amazon led a $500 million Series C round for small modular reactor company X-energy. At the same time, the cloud computing giant signed a deal with Energy Northwest, to deploy four X-energy reactors across the consortium’s region in central Washington in the early 2030s.
Amazon’s “grid-tied” approach to bringing nuclear power to data centers is mirrored by the moves of its competitors. Google’s deal with Kairos Power will add “500 MW of new 24/7 carbon-free power to U.S. electricity grids,” the company said in October. And Microsoft’s investment in traditional nuclear, reviving a reactor at Three Mile Island, is likewise on-grid.
Off-grid SMRs are largely theoretical at this point, but other key AI players have expressed interest in the strategy. Oracle, for example, said in September it would use three behind-the-meter SMRs to power a massive data center it’s planning in an undisclosed location.
But AWS, Oyer emphasized, wants to “go in and be grid-tied.” That will likely mean partnering closely with utilities, and possibly adjusting locations to “corridors that have excess transmission capacity,” or even getting closer to generation to alleviate the need for transmission. This reflects a broader shift in the data center industry — going where energy is, rather than where fiber is.
“We’d really just rather plan in lockstep with the utilities and the transmission operators,” he said.
That said, Amazon isn’t ruling out the possibility that its power procurement plans will shift under the new administration.
“Amazon has worked with many administrations over its existence, and will continue to work with every administration to focus on growth for the long-term,” Oyer said.
As to the Trump administration’s avid support of fossil fuels to power data centers, and the president’s public bid for co-location, Oyer said Amazon expects the policy landscape to change “details” of how the company approaches power deals, rather than prompt the company to overhaul them completely.
“We’ll continue going and executing our plans, which adapt year in and year out as load goes up and down and markets change,” he said. “We’re stubborn on [net zero carbon] vision for 2040, we will hit our climate pledge goals. We’ll be a little bit flexible on the details.”
