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January 22, 2024

Proposed data center would get power from Millstone nuclear plant

DOMINION RESOURCES The Millstone nuclear power station.

A proposed data center complex on the Millstone nuclear power station’s private property in Waterford would draw electricity directly from the plant — a unique plan its developers describe as environmentally friendly, minimally disruptive and economically advantageous for the region.

But it could be a tough sell to regulators, residents and other interested parties, given the sensitive nature of the location.

Data centers are the internet’s physical form: warehouses packed with routers and servers that process digital activity from TikTok to tax filings. With internet capabilities expanding rapidly into realms like artificial intelligence and virtual reality, so too is demand for data center capacity.

That’s created a big opportunity for investors and developers, provided they can find a affordable, reliable and relatively clean source of energy — a challenge particularly acute in a state like Connecticut, which is known for high energy costs. Large data centers, referred to as “hyperscale,” can require as much electricity as 80,000 households, experts say. And as regulators increasingly clamp down on carbon emissions, data center developers are also seeking power sources that produce less greenhouse gas. 

Developer NE Edge identified a creative solution.

The proposed development would occupy less than 5% of Millstone’s 526-acre site — two 2-story data center facilities spanning an area of roughly 1.5 million square feet, as well as space for an electric switchyard connecting the power station directly to the data centers. NE Edge and Dominion Energy, which owns and operates the Millstone Power Station in Waterford, presented the idea to town leaders early last year.

The 300-megawatt data centers would purchase electricity directly from Dominion, “creating a ready to market, non-carbon solution to the pressing needs of the regional Cloud infrastructure,” George McLaughlin of NE Edge wrote in an introductory letter to Waterford First Selectman Robert Brule.

“We are convinced this project has the potential to provide benefits to all involved,” he wrote.

Why Connecticut?

Connecticut entered the race to attract data centers in 2021, when the legislature approved a business incentive program waiving sales and property taxes for 20 years on data centers that invest at least $200 million in the state — or just $50 million if the facility is located within a state-designated enterprise zone. The tax exemptions may be extended to 30 years if a $400 million investment is made, or a $200 million investment in an enterprise zone.

“Connecticut needs to get in the game and bring this industry to our state,” Gov. Ned Lamont said in a statement at the time urging lawmakers to pass the legislation. He said the tax incentive was “exactly what our residents want to see when it comes to our commitment to economic growth and continuing our Connecticut comeback.”

Since then, a few developers have taken initial steps to begin data center construction in various Connecticut towns — a process that involves finding and acquiring land; establishing agreements with town leaders (to make annual payments in lieu of taxes on the value of their real estate and equipment); designing the facilities; seeking permits; and advocating for changes to local zoning regulations where needed. Among the biggest hurdles driving increased delays is finding clean, affordable and reliable sources of electricity to power the facilities.

Analysts say data center developments commonly take several years. 

Just a month after their presentation, NE Edge and Dominion signed what’s known as a “host fee agreement” with the town of Waterford last March, promising to pay a fee of $231 million over 30 years in lieu of property taxes — as provided for in the 2021 legislation.

In making its case, NE Edge highlighted the development’s minimal carbon footprint and water usage, its intentions to hire union labor for construction and its roles as both a steady customer for the struggling power station and the “second largest contributor to the Town of Waterford budget.”

(NE Edge is also reportedly working on data center developments in Killingly and Bozrah. An effort in Groton fell through, and the town has since outlawed hyperscale data center developments.)

Balance of power

But in the months since Waterford approved the agreement with NE Edge and Dominion, a growing number of local residents have expressed concerns about the plan, raising questions about everything from the environmental impact of the facilities to the sound and traffic they might generate, the energy they’d require and the fire danger they could pose.

Some pointed out that the Millstone site occasionally floods, which could force the plant to shut down — lending further uncertainty to how critical infrastructure like a data center would remain operational under such circumstances.

A newly formed group called Concerned Citizens of Waterford took issue with what they saw as a lack of transparency around the data center plan, and a local petition gathered hundreds of signatures requesting the RTM hold a public meeting with NE Edge and Dominion to answer questions.

“If you’re going to site a 1.5 million square foot data center that draws 300 megawatts of electricity and have it plug directly into reactors 2 and 3, which is their plan, you’d think that everyone in the neighborhood would know about it,” Bryan Sayles, founder of Concerned Citizens of Waterford, said recently on a local public access television program. 

(Millstone’s two active nuclear units generate a combined 2,100 megawatts. Eversource and United Illuminating, the state’s two electricity distributors, purchase 9 million megawatt-hours of electricity each year from Millstone — roughly half of the site’s output.)

In early October, William McCoy, a lawyer for NE Edge, was invited to give a presentation to the Waterford Representative Town Meeting, the town’s legislative body. McCoy sought to address residents’ concerns, explaining that the questions they’d raised would be coming before various town committees — such as Planning & Zoning and Inland Wetlands — as soon as NE Edge and Dominion could reach their own bilateral business agreements, finalize the development plan and file it with the town’s committees. 

“I will not come in, as counsel for this group, unless and until we have those in place and they are fully vetted, so that we know that we have a reasonable prospect for getting them approved,” McCoy, who said he owns property on Millstone Point, told members of the RTM. 

McCoy highlighted a section of the host municipality fee agreement, which requires that the data centers produce no more ambient sound than is currently present at the site — calling for a “sound study” to be conducted as part of the development process. And in response to questions about whether the data center’s voluminous electricity consumption could present a risk to the region’s power grid or lead to higher rates for utility customers, McCoy said, “nothing could be further from the truth.” 

Michael O’Connor, site vice president at Millstone Power Station, told RTM members at a December meeting that the data center development would actually help the plant remain operational for longer because they’ll have another steady customer. “These things that we’re doing in the next three to five years make sure clean energy comes out of that peninsula for the next 100 years,” he said. O’Connor didn’t respond to a phone call seeking additional comment.

In the dark

There’s another hurdle for Dominion and NE Edge. Before they can finalize their agreements and project plans, and before they can apply for local authorization, Dominion will likely need to seek approval from the Connecticut Siting Council to revise boundaries at the Millstone site in order to accommodate the new data centers. The siting council has jurisdiction over the location of power lines, substations and power plants, telecommunications facilities and hazardous waste sites. 

Dominion petitioned the council last year, arguing the proposed NE Edge data centers and switchyard “are not, in any way, associated with or related to Dominion’s electric generating operations at [Millstone Power Station]” and therefore shouldn’t be subject to the council’s approval. That petition was denied earlier this month.

“It is premature for the Council to review any potential effects of the requested site boundary revision on the environment and the provision of adequate and reliable public utility services at the lowest reasonable cost to ratepayers throughout the state given the lack of information surrounding the proposed data centers and their direct interconnection to Millstone Power Station Units 2 and 3,” Melanie Bachman, the council’s executive director, wrote in correspondence to a lawyer for Dominion. 

Bachman didn’t respond to emails and phone calls seeking clarification about the decision, but it’s likely Dominion’s proposal will need to be fully vetted by the council before the data center project can proceed. 

A representative for Dominion declined to comment on the decision, and McCoy didn’t return phone calls. But McCoy told the RTM in October that if the siting council took up the decision, Waterford could lose local control.

“If it goes to the siting council, it’s not coming back here. It’s going to all be done at the siting council and the state,” he said.

Concerned Citizens of Waterford considered the siting council’s decision a win. Several members had submitted public comments to the council and asked for a public hearing on the matter.

“We’re being vigilant, we don’t think this is the end of it,” Sayles said.

A representative for ISO-New England, the nonprofit corporation that manages the region’s power grid and purchases power from generators including Millstone, said in an emailed statement that they hadn’t seen any proposal of the concept and therefore hadn’t studied its potential impact on the regional power system.

“If a specific proposal does come to the ISO, we would evaluate it,” Mary Cate Mannion of ISO-NE wrote.

Mannion added that New England’s electricity demands are expected to double by 2050 as transportation operators and buildings seek to decarbonize, and a new data center wouldn’t necessarily be a problem. But she echoed many of the other stakeholders saying there’s a need for more light on the situation.

“We have not evaluated what the configuration of a data center and a power plant might look like or the jurisdictional issues around that concept,” she said. “We would need more specific information to evaluate that concept.”

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