Amazon and AEP are exploring a 960-megawatt nuclear plant in Indiana

American Electric Power $AEP and Amazon $AMZN are exploring a 960-megawatt nuclear plant in Indiana that would use small modular reactors from X $TWTR-energy, the companies said on Monday.

AEP and X-energy announced a joint development agreement to study the feasibility of building the plant at the former Breed Generating Station site in Sullivan County, a retired coal plant. Amazon is supporting development through a funding agreement and intends to buy the power under a long-term contract covering the facility's costs and operations, AEP said.

X-energy detailed the project as 12 Xe-100 units of 80 megawatts each, configured in groups of four. If the project reaches a final investment decision and is built, the plant would connect to the grid. AEP said the development and funding agreements are designed to provide financial safeguards for its customers and investors.

The companies expect to determine by late 2029 if the project will move forward, according to Bloomberg. Terms of the agreements were not disclosed, and the reactor design requires federal approval, according to Bloomberg. Bloomberg also reported that no Xe-100 units are under construction.

AEP needs to add 63 gigawatts of capacity by 2030, according to Bloomberg. Shane Lies, AEP's president of nuclear development, told Bloomberg that the company expects demand growth to continue beyond 2030.

"Our agreements with Amazon and X-energy will provide all necessary capital protections and financial safeguards that we have said are essential for any potential nuclear project to move forward," Bill Fehrman, AEP chairman, president and chief executive officer, said in a statement.

Josh Weissman, Amazon's vice president of data center infrastructure capacity delivery, said in a statement that the company aims to "develop nearly a gigawatt of carbon-free power for the regional grid and pay our full costs without passing them to others." Amazon has a Climate Pledge goal of net-zero carbon across its operations by 2040.

Indiana Gov. Mike Braun said in a statement that the project has the potential to create well-paying jobs in Sullivan County. The county recently joined the Indiana Advanced Nuclear Ready Communities Program, AEP said.

X-energy said the Indiana project would be its third announced commercial Xe-100 project in the U.S. and the second under its collaboration with Amazon, which aims to bring more than 5 gigawatts of new nuclear capacity to the U.S. grid by 2039. The first is Energy Northwest's Cascade Advanced Energy Facility in Washington state. X-energy's proposed four-unit plant for a Dow site on the Texas Gulf Coast is in the final phases of a U.S. Nuclear Regulatory Commission review of its construction permit application.

Amazon has been adding to its nuclear holdings. It signed a 20-year power purchase agreement with Constellation Energy that covers 690 megawatts from the Calvert Cliffs plant in Maryland and helps fund about 190 megawatts of added capacity at the site.