FERC Weighs Data Center Co-location to Bolster Electricity Reliability
The Federal Energy Regulatory Commission (FERC) is grappling with the rapid growth of data centers and their impact on electricity demand and reliability. PJM Interconnection, serving 67 million people, anticipates a significant load increase driven by data centers in Virginia and Pennsylvania. FERC has ordered PJM to propose schemes for co-locating data centers and power plants, with eight potential solutions submitted.
Nationwide electricity demand is projected to grow at an annual rate of 3 percent, largely due to new data center developments. FERC, responsible for ensuring reliable and affordable electricity, has been delayed in developing a co-location policy due to internal disagreements. Former FERC chair Mark Christie had warned of PJM's reliability crisis before leaving office.
Utilities, power generators, lawmakers, and data center developers are eagerly awaiting FERC guidance for tens of billions in AI infrastructure spending. The North American Energy Standards Board (NAESB) is currently tasked with creating a rule regarding the interconnection of energy facilities and data centers at FERC. Newly appointed FERC chair David Rosner considers co-location a priority but has not yet provided a timeline for action.
PJM's eight potential schemes for co-locating data centers and power plants are on the table. However, FERC's guidance is crucial for ensuring these solutions do not compromise electric reliability or increase consumer costs. With the growing demand for data centers and the need for reliable electricity, all stakeholders await FERC's decision to shape the future of AI infrastructure spending.
