FERC orders grid operators to fast-track AI data centers while shielding consumers from costs

AI data centers just got a government-mandated fast lane to the grid

The Federal Energy Regulatory Commission (FERC) told grid operators on Thursday to fast track interconnection requests from data centers and other large electricity users. Under the orders, six major grid operators have to show that data centers are "able to connect to the transmission system in a timely and orderly manner." Data centers will be responsible for paying the costs of the interconnection. Commissioners approved the orders unanimously. FERC also provided an opening to grid tech startups, directing grid operators to consider "alternative transmission technologies." The commission didn't name specific technologies, but the directive could include things like solid-state transformers or superconducting transmission lines. Grid operators now have 30 days to submit a report detailing how much generating capacity they have to spare, if any. They also have 60 days to "defend or revise" electricity rates within their regions. FERC also directed grid operators to be more accommodating to behind-the-meter power for data centers. While FERC's directives gave data centers a fast lane to connect, they did not address the shortage of generating capacity. Grid connections have been slow to materialize in part because new power plants are also having problems connecting. At the end of 2023, grid connection requests for power plants exceeded the total capacity of the existing power plant fleet, meaning the line to get on the grid was longer than the grid itself could theoretically serve. Against this backdrop, electricity demand from data centers is expected to nearly triple through 2035. Grid operators, which had grown accustomed to near-zero demand growth over the last two decades, have strained under the load. Some, like PJM, the country's largest grid operator, have descended into something resembling chaos, with major utilities threatening to withdraw. Tech companies and developers, unable to connect to the grid in a timely manner in many locations, have been turning to on-site, or behind-the-meter, power (which is typically more expensive and complicated) out of desperation. Still, enough projects have been able to connect that electricity prices have soared in many regions. Wholesale electricity rates are up as much as 267% compared with five years ago, according to Bloomberg. FERC was prodded to take on the issue by Secretary of Energy Chris Wright, who in October said delays in data center grid connections had threatened to undermine U.S. competitiveness in AI. Since then, public sentiment toward AI and data centers has soured considerably. Meanwhile, the Trump administration on Wednesday said it would pay $765 million to wind developer Invenergy to cancel offshore wind leases near California, Maine, and New York. The company said it would use the money to build natural gas plants in the Midwest and geothermal projects in the West. One of Invenergy's wind projects would have generated as much as 2.4 gigawatts of power -- enough, at peak output, to supply roughly 1.8 million homes. Altogether, the Trump administration has now spent about $2.6 billion to scuttle offshore wind developments.

US energy regulator to order grid operators to expedite AI data center applications -- says projects should bring their own power or cut usage during high demand

The federal government wants more data centers to come online -- as long as they do not impact the electricity supply. The U.S. Federal Energy Regulatory Commission (FERC) is taking steps to ensure that AI data center operators are connected to the grid as quickly as possible. According to Bloomberg, the energy regulator is about to release an order asking grids to prove that they're expediting AI data center connections, especially projects that "bring their own power, or curtail demand during times of high stress." "We promised some fireworks last month and we're going to light the fuse today," FERC Chairperson Laura Swett said in a meeting, Bloomberg reports. Commissioner David Rosner also said that any studies to enact these changes that grids will do must be completed in 90 days. These moves are in line with President Donald Trump's "AI Action Plan" policy roadmap that he launched last year, which seeks to make it easier to build AI infrastructure. Data centers need massive amounts of electricity -- something that the U.S. grid is poorly-equipped to handle. Because of this, grid operators invested heavily in upgrading their infrastructure and then passed on their costs. PJM Interconnection, which is the largest power grid operator in the U.S., raised its power costs by 75.5%, with this increase largely blamed on AI data centers. The State of Maryland also filed a complaint with the FERC, as PJM Interconnection planned to charge it $2 billion for infrastructure upgrades needed for projects that do not directly benefit the state.. But despite FERC's condition that data centers should bring their own power or reduce demand as needed for them to qualify for fast-track processing, this will still likely be a cause for concern for many Americans who are increasingly resisting data center developments in their backyards. After all, it's not just power consumption that many communities are concerned about. Many data center developments are also being built in drought zones, where water shortages are already an ongoing concern. Some people are also concerned about the noise pollution that these facilities bring to otherwise quiet rural areas. AI hyperscalers are keen to get their data center projects off the ground, especially as the demand for compute is still growing. The White House also wants these developments to go full steam ahead, especially as it deems that this infrastructure is crucial for the U.S. to win the "AI race" against China. But as long as citizens feel that these projects will threaten their quality of life, data center developers will only continue to see increasing opposition. Follow Tom's Hardware on Google News, or add us as a preferred source, to get our latest news, analysis, & reviews in your feeds.

Federal regulators back Trump's plan to speed power to energy-hungry AI data centers

Federal regulators on Thursday agreed to let large energy users connect more quickly to the nation's inefficient and electric transmission system to accommodate surging demand from power-hungry artificial intelligence data centers. Energy Secretary Chris Wright had urged the Federal Energy Regulatory Commission to act in an effort to help the United States better compete with China for superiority in the fast-growing AI sector. Tech companies and data center developers have welcomed the chances for faster connections to the country's power supply. But utilities, states and regional grid operators worried that the Republican administration's plan would remove their authority to manage the process. Clean energy advocates want the agency to advance, rather than undermine, state-level efforts to require the use of renewable energies. The commission's actions come as a backlash grows against data centers over fears about rising electricity prices and concerns about the massive amounts of energy and water they use, polluting communities across the country and straining water resources and the electric grid. Unanimous vote and affordability FERC members voted unanimously to direct that AI data centers and other large power users are "able to connect to the transmission system in a timely and orderly manner." Laura Swett, an appointee of President Donald Trump who chairs the commission, called the vote historic action to push the country's electricity market into the future while also protecting ratepayers from shouldering the costs of connecting big power users to the grid. "I know that Americans across the country are concerned about affordability, and so are we," Swett said, referring the five-member commission. "Many Americans are increasingly concerned about the interconnection of large (power) loads, and data centers will increase their bills in that stress," Swett said. "As chairman, I am taking extremely seriously the mission that Congress has entrusted us to ensure that rates are reasonable and that Americans pay their fair share or less." Data centers would pay the full cost of any grid upgrades needed for their connection, under the commission order. But that order can do little to address the tightening energy supplies that are driving up electricity bills in some areas and raising warnings of blackouts as the construction of data centers outpaces the speed of new power plants coming online to serve them. The vote comes eight months after Wright asked the independent agency to take more control over ensuring that the vast network of massive computing warehouses needed to power AI are connected quickly to high-voltage transmission lines. A search for power Tech giants are scrambling to find enough power for their data centers and report that, in some places, it will take years to connect to the electric grid. Besides power bottlenecks, the tech industry is running into widespread opposition from communities Residents do not want to live next to or near a data center, citing fears about rising electricity prices, pollution and water consumption. There have been protests over losing open space, farmland or rural character. More than 4,000 data centers now operate in the U.S., according to one estimate, with an additional 3,000 planned or under construction, including some that consume more energy than a small city. Such facilities have ballooned in size to accommodate the demands of AI. Trump has tried to deflect public concerns about AI, seeing the fast-evolving technology as crucial for the U.S. to attract foreign investment and maintain its economic and military prowess. Trump signed an executive order this month that establishes a framework for the federal government to vet the national security risks of the most advanced AI systems for up to a month before their public release. In December, FERC took an earlier step to help data center operators get electricity quickly, voting to allow tech companies to effectively plug a data center directly into a power plant. Power demands from data centers Companies such as xAI, Google, Microsoft, Meta, Oracle, OpenAI and Amazon have signed Trump's Ratepayer Protection Pledge, in which they agreed to build or buy new sources of power generation for their data centers and cover the expense of infrastructure upgrades. They also committed to making backup generation available to prevent blackouts in times of emergency, and to hire locally for their data center build out. Data from the Electric Power Research Institute shows that data centers now account for about 5% of U.S. electricity demand, but could triple by 2035. In Virginia, data centers account more than 25% of overall demand and could rise to more than 40% by 2030. Tech companies have continued to raise their spending on data centers, but there is evidence that construction is lagging. A J.P. Morgan report last month said that, based on satellite images, over 60% of data center capacity planned for completion in 2027 hasn't begun construction, and another 7% is delayed. It said the culprits are typically related to permitting and delays in getting gas turbines, transformers and skilled labor.

Federal Energy Regulator Seeks to Limit Conflicts Over Data Centers

The Federal Energy Regulatory Commission directed grid managers to make changes that protect individuals from higher electricity bills while giving data centers access to power faster. A federal energy regulator on Thursday adopted guidelines that it said would help protect individuals from shouldering some of the cost of connecting data centers to electric grids. Its new approach would also make it possible for data centers to connect to grids faster, if they agreed to certain conditions. In a unanimous decision, the Federal Energy Regulatory Commission directed the organizations that manage electricity grids to make changes to address the growing frustration among many Americans that data centers were expanding too fast and driving up their energy bills. The commission called on grid managers, utilities and other players to provide detailed information about how spending on new transmission lines and other equipment to serve data centers affects the rates paid by individuals to ensure that homeowners and renters were not effectively subsidizing technology companies. In addition, the commission said grid managers should allow data centers to connect to their networks sooner if those centers were near electricity-generation sources; offered to build their own power supply; or were willing to reduce how much energy they used during periods of high demand like on very hot or very cold days. U.S. technology companies in recent years have been building dozens of power-hungry data centers to develop artificial intelligence as they try to one-up each other and tech firms in China. That has contributed to an increase in electricity demand, driving up the cost of power for everybody connected to the grid. "We are setting the stage for a resilient, reliable and forward-thinking grid that empowers communities and safeguards consumers by transforming the way large energy users access the grid," said Laura V. Swett, the chairman of the five-member federal commission. "We can facilitate both, which is exactly what we did today." States and the electricity industry had been hoping that the commission would develop rules to ensure individuals and small businesses were not paying more for energy because of data centers. At the same time, technology companies wanted to shorten the time required to connect data centers to the grid, a process that in some places can take several years. Thursday's decision, utility industry experts said, appears to have found a way to meet both goals. "This seems to be a surprisingly well-constructed federal energy initiative," said Tyson Slocum, director of the energy program at Public Citizen, a nonprofit research and consumer group. "On its face the new principles seem to be productive in terms of attempting to shield consumers from cost shifts and ensuring transparency." Electric grids across the United States are increasingly under strain. Many of the lines, transformers and other equipment utilities use are aging. In some places, demand for electricity is also rising as more people use electric cars and heat pumps. And then there are data centers, some of which can use as much power as a midsize city. Residential customers across the country are increasingly opposing new data centers because of concerns about the rising cost of electricity, the centers' water use and other environmental and economic affects of such facilities. Data centers are expected to be a major issue in some elections this November. The federal commission's decision on Thursday will not quickly result in changes on the ground. The organizations that manage regional grids, like PJM in 13 Eastern states and the Midcontinent Independent Systems Operator in the Midwest, will now spend months making changes in consultation with the commission, experts said. "This is a bold move by this commission," said Rob Gramlich, president of Grid Strategies, a consulting firm based in Washington. "It's a necessary step but it's not sufficient. People are looking for the issue to get resolved."

A Federal Regulator Wants to Fast-Track AI Data Centers Onto the Power Grid

It seems like a major U.S. energy regulator is trying to have it all. It wants grid operators to move faster in connecting power-hungry data centers, while also keeping costs down for regular consumers. The Federal Energy Regulatory Commission (FERC) today issued orders to the six major regional grid operators under its jurisdiction. FERC has given the six regional transmission organizations and independent system operators 60 days to either justify their current rules for connecting data centers, manufacturing facilities, and other large energy users to the grid, or file changes to address certain issues the commission singled out. These organizations are often described as the "air traffic controllers" of the power grid. While they don't usually own power plants or power lines, they help balance supply and demand, operate wholesale power markets, and coordinate grid planning across large regions. In a press release, FERC said the orders are one of the most significant actions the commission has taken to "modernize the nation's electric markets and push the economy into the future by speeding integration of large energy users onto the grid with additional rigorous consumer safeguards." Specifically, the commission laid out five categories of potential reforms. These include developing more efficient application and study processes for connecting large load projects to the grid, as well as considering "alternative transmission technologies." Other areas include preventing costs from being shifted onto regular customers by requiring more transparency around transmission costs, accommodating projects that are built next to power plants or plan to produce their own power, and providing new transmission services for projects that can shift their demand when the grid is under stress. "We are setting the stage for a resilient, reliable, and forward-thinking grid that empowers communities and safeguards consumers by transforming the way large energy users access the grid," said FERC Chairman Laura Swett in the press release. "It also is critical that FERC provide certainty for investors by directing the markets to protect existing deals and unlock opportunities for technological advancement and economic expansion." The six grid operators named in the orders are PJM Interconnection, Midcontinent Independent System Operator, Southwest Power Pool, California Independent System Operator, ISO New England, and the New York Independent System Operator. Additionally, the orders give the operators and their transmission owners 30 days to submit reports describing how they plan to ensure there is enough power supply for existing customers and future large energy users. The order comes as major tech companies are racing -- and spending billions -- on massive new data center projects to train and run advanced AI models. Those data centers can demand a lot of energy. For instance, Kevin O'Leary's planned data center project in Utah is expected to eventually generate and consume up to 9 gigawatts of power. That's roughly double the amount of electricity the entire state of Utah currently consumes, according to The Salt Lake Tribune. Still, there is growing community backlash, especially from local residents worried about the strain these massive facilities could place on water supplies, power grids, and their neighborhoods. In some cases, that opposition has already helped defeat proposed data center projects. A Gallup survey conducted in March found that seven in 10 Americans oppose constructing data centers for artificial intelligence in their local area, including 48% who are strongly opposed. About 46% said they worried a great deal about the environmental impacts of AI data centers.

Energy regulators push for faster AI data center grid connections

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.

Regulators back Trump's plan to power AI data centers faster with grid connections

Energy Secretary Chris Wright had urged the Federal Energy Regulatory Commission to act in an effort to help the United States better compete with China for superiority in the fast-growing AI sector. Tech companies and data center developers have welcomed the chances for faster connections to the country's power supply. But utilities, states and regional grid operators worried that the Republican administration's plan would remove their authority to manage the process. Clean energy advocates want the agency to advance, rather than undermine, state-level efforts to require the use of renewable energies. The commission's actions come as a backlash grows against data centers over fears about rising electricity prices and concerns about the massive amounts of energy and water they use, polluting communities across the country and straining water resources and the electric grid.

Regulators greenlight plan for quick AI data center grid connections

Federal regulators on Thursday took steps aimed at both speeding up the buildout of AI data centers and reducing costs. The Federal Energy Regulatory Commission (FERC) directed regional electric grid operators to reform various processes related to the connection of these and other large sources of power demand to the grid. "We are charting new territory and setting the standard for how America will responsibly and efficiently integrate large energy loads into the bulk electric grid while protecting consumers," FERC Chair Laura Swett said Thursday. "My takeaways from the hyperscalers were, the biggest ones were that the rules aren't clear and the markets aren't going fast enough. And we are answering both of those today in very loud order," added Swett, one of three Republicans on the commission. Swett said the new orders approved Thursday require regional grid operators to show that they have adequate safeguards to prevent costs from shifting to power consumers -- or to take steps to create them. The Republican commissioner also said that FERC is preliminarily directing operators to "provide unprecedented transparency" to allow states to use information to set electricity rates. And, she said the orders will require the markets to create clear rules for consumers who bring their own power along with them. However, Swett also acknowledged the commission's authority to protect ratepayers is limited and called on states to take further action. "We make clear that we act today to guard against cost shifting among transmission customers, but the states have the responsibility to ensure that there is no cost shifting among retail customers, because that simply is not within FERC's power to safeguard," she said. "We call on our state counterparts to finish the job," Swett said. The AI industry has pushed to rapidly build new data centers to support the development of the technology, which requires vast computing power. Data centers therefore use a lot of electricity and are, in many cases, increasing electricity demand. This creates both cost and grid reliability concerns. Americans have become increasingly wary of data centers and how the sprawling server warehouses will impact their electricity prices. Power costs continue to rise -- they were up 5.9 percent year-over-year in May. A recent Reuters/Ipsos poll found that 77 percent of Americans are concerned that AI will make electricity more expensive and 57 percent said they would not support a data center being built in their community. Major tech companies attempted to quell these concerns, signing on to a White House pledge earlier this year to cover the full costs of bringing new data centers online and prevent ratepayers from facing price hikes. FERC is the nation's federal energy regulatory body and has jurisdiction over interstate power transmission. It is made up of five commissioners, currently three Republicans and two Democrats. The U.S. electric grid is divided into regional grid operators. States also have some authorities through public utility commissions or similar organizations. Grid operators are usually relatively unknown to the general public, but one such operator called PJM has recently come under political fire from bipartisan governors and the Trump administration over electricity rates. In the face of rising demand from large facilities like data centers, Sen. Cynthia Lummis (R-Wyo.) proposed legislation Wednesday to clarify that FERC has jurisdiction over how massive electricity users connect to the grid. It also directs the agency to create a standardized process for such interconnections. Rob Gramlich, president of consulting firm Grid Strategies, said that under Thursday's orders, regional transmission operators will have to make some notable changes. "They require a number of changes for the grid operators, some of which are providing information to states so that states can allocate costs to large-load customers and some of them are providing new services to enable faster interconnection for the new large load customers," Gramlich said. "I do think these will help. There's a lot riding on what the states do since the states regulate retail customers including these large loads but I do think FERC is doing what it can within its power over the wholesale system," he added.

U.S. Federal regulators order grid operators to speed power to energy-hungry AI data centres

WASHINGTON -- U.S. Federal regulators on Thursday ordered regional grid operators to help large energy users connect more quickly to the nation's inefficient and aging electric transmission system, a step they said is needed to accommodate surging demand from power-hungry artificial intelligence data centres. U.S. Energy Secretary Chris Wright had urged the U.S. Federal Energy Regulatory Commission to act in an effort to help the United States better compete with China for superiority in the fast-growing AI sector. Tech companies and data centre developers welcomed the chance to connect faster to the country's power supply for the biggest energy users ever built in the United States, including some that consume more electricity than a small city. Utilities, states and regional grid operators had worried that the Republican administration's plan would remove their authority to manage the process, but FERC said the order leaves states in control of retail electric rates, terms and conditions. Clean energy advocates had urged regulators not to undermine state-level efforts to require the use of renewable energies, and came away satisfied Thursday. The commission's actions come as a backlash grows against data centres over concerns about the massive amounts of energy and water they use and fears about noise and air pollution, water shortages and a loss of open space or farmland. Unanimous vote and affordability FERC members voted unanimously to direct six regional grid operators to ensure that AI data centres and other large power users are "able to connect to the transmission system in a timely and orderly manner." Laura Swett, an appointee of U.S. President Donald Trump who chairs the commission, called the vote "historic" and said it would push the country's electricity market into the future while respecting states' rights, protecting reliable electric service and shielding ratepayers from shouldering the costs of connecting big power users to the grid. "I know that Americans across the country are concerned about affordability, and so are we," Swett said, referring to the five-member commission. She said that, as chairman, "I am taking extremely seriously the mission that Congress has entrusted us to ensure that rates are reasonable." The vote comes eight months after Wright asked the independent agency to take more control over ensuring that the vast network of massive computing warehouses needed to power AI are connected quickly to high-voltage transmission lines. Data centres would pay the full cost of any grid upgrades needed for their connection, under the commission order. But that order can do little to address the tightening energy supplies that are driving up electricity bills in some areas and raising warnings of blackouts as the construction of data centres outpaces the speed of new power plants coming online to serve them. Robert Montejo, a lawyer who represents data centres, said the most important message from FERC's action is that AI "has fundamentally changed the electricity landscape. The grid and prior policy were not built for the pace and scale of demand we're seeing from AI infrastructure, and FERC is signaling that standing still is no longer an option." The six regional grid operators under the order serve 200 million Americans, or two-thirds of FERC's jurisdiction. FERC, meanwhile, invited utilities that handle their regional transmission systems to also participate and analysts said the agency could eventually pressure them, too. A search for power Tech giants are scrambling to find enough power for their data centres and report that, in some places, it will take years to connect to the electric grid. The Edison Electric Institute, which represents investor-owned electric utilities, said FERC's order builds on regional and state processes already underway while "supporting flexibility and innovation." Besides power bottlenecks, the tech industry is running into widespread opposition from communities where residents don't want to live next to or near a data centre. More than 4,000 data centres now operate in the U.S., according to one estimate, with an additional 3,000 planned or under construction. Trump has tried to deflect public concerns about AI, seeing the fast-evolving technology as crucial for the U.S. to attract foreign investment and maintain its economic and military prowess. He signed an executive order this month establishing a framework for the federal government to vet the national security risks of the most advanced AI systems for up to a month before their public release. In December, FERC took an earlier step to help data centre operators get electricity quickly, voting to allow tech companies to effectively plug a data centre directly into a power plant and Thursday's order sought to ensure that option is accessible around the country. Power demands from data centres FERC told grid operators to respond within 30 days on how they will ensure there is adequate power supplies for new and future data centres, and within 60 days on plans to integrate large power users in line with the new guidelines. Swett told reporters after the meeting that she hoped faster connection processes are in effect in "as little time as possible." She didn't set an exact timeline. Jeff Dennis, executive director of the Electricity Customer Alliance, said FERC's order is responsive in particular to big power users and state regulators. Tech giants are confronting unclear rules to connect data centres to high-voltage transmission systems, while state regulators need more clarity on who should bear the cost of regional transmission projects approved at the federal level, he said. Rob Gramlich, a Washington-based energy consultant, said states should quickly develop rules to accommodate large power users and prevent cost shifts to residential and business customers. FERC could assert broader jurisdiction over interconnection issues if states don't act quickly, he said. Data from the Electric Power Research Institute shows that data centres now account for about 5% of U.S. electricity demand, but could triple by 2035. Tech companies have continued to raise their spending on building and equipping data centres, but there is evidence that construction is lagging and projects are hitting roadblocks, either because of permitting delays, growing local opposition or bottlenecks around gas turbines, transformers and skilled labor. ___ Matthew Daly And Marc Levy, The Associated Press