Energy regulators push for faster AI data center grid connections
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Federal regulators on Thursday ordered grid operators across a vast swath of the country to show how they will speed connection of AI data centers to transmission systems.
Why it matters: The Federal Energy Regulatory Commission's orders aim to enable the AI boom, but without making power grids less reliable or raising consumer costs.
- The move takes place as tech giants are thirsty for power to fuel AI, but political and community backlash to massive new data centers is growing.
Driving the news: The regulators issued their orders to six grid regions that together encompass over 200 million people in 30 states, according to the commission.
- The commission is demanding that the grid operators "justify or reform the rules that govern how data centers, manufacturing facilities, and other large energy users connect to the electric grid," a summary states.
What they're saying: Chairwoman Laura Swett called the orders on data centers and other large new power demand sources an "historic action" to push electricity markets into the future.
- "This is a future of fair cost allocation, unprecedented transparency for the American ratepayer, respect for states' rights, efficient markets, reliable service, and speed to power," she said.
The big picture: Data centers are responsible for around 5% of U.S. electricity demand, but they could soak up as much as 9% to 17% of U.S. power generation by 2030, per the nonprofit Electric Power Research Institute.
- Massive new facilities for training and using AI models risk placing localized new strains on grids.
How it works: The orders went to the PJM grid operator, which covers a wide swath of the Midwest and mid-Atlantic, as well as grid operators in the Southwest, California, New York and elsewhere.
- The orders lay out five categories where the commission is seeking reforms, including efficient grid connection studies and preventing "cost shifting" to ratepayers.
- The orders tell grid operators to explain how they will enable projects that pair new data centers next to new power generation, and tech companies' plans for "behind-the-meter" projects — that is, power that directly supplies these new demand sources.
- The measures also look to encourage data center projects that can reduce power use at times of high demand.
Thursday's action came after Energy Secretary Chris Wright last fall urged the commission to craft a major new rule on grid connections.
- Instead, the commission responded with more regionally tailored orders as it looks to prevent legal challenges over state jurisdiction and act quickly.
- Analysts with the research arm of financial services firm TD Cowen, in a note, said the orders "accelerated the timeline in which reforms can be deployed" compared to the slower rulemaking process.
What's next: The orders seek initial responses within 60 days, with added information on "resource adequacy" for new and existing large loads within another 30 days.
- FERC also isn't ruling out other, separate steps to respond to Wright's request in the future, noting that it's formally leaving the docket open.
