FERC orders fast lane for data center grid connections

The Federal Energy Regulatory Commission told grid operators on Thursday to fast track interconnection requests from data centers and other large electricity users, and commissioners approved the orders unanimously. The directive requires six major grid operators to show that data centers are "able to connect to the transmission system in a timely and orderly manner," and makes data centers responsible for paying interconnection costs.

What did FERC order?

FERC directed six major grid operators to accelerate data center interconnections, give a 30-day report on spare generating capacity, and allow 60 days to defend or revise regional electricity rates. Grid operators have 30 days to submit a report detailing how much generating capacity they have to spare, if any, and 60 days to "defend or revise" electricity rates within their regions. The commission also told operators to be more accommodating to behind-the-meter power for data centers and asked them to consider "alternative transmission technologies," a phrase that opens the door to things like solid-state transformers or superconducting transmission lines.

Those steps do not change who pays for interconnection: the orders state data centers will be responsible for paying the costs of the interconnection. The commission did not name specific alternative technologies, but the guidance explicitly instructs operators to consider them.

How big is the grid gap and why is it urgent?

The grid already faces a capacity squeeze: at the end of 2023, grid connection requests for power plants exceeded the total capacity of the existing power plant fleet. That backlog matters because electricity demand from data centers is projected to nearly triple through 2035, and grid operators that expected near-zero demand growth over the last two decades are now strained. Some operators have experienced acute stress: PJM, the country’s largest grid operator, has seen disputes escalate to the point where major utilities threatened to withdraw.

Slow connections have pushed tech companies toward on-site, behind-the-meter power, which the article notes is typically more expensive and more complicated. Enough projects have connected that wholesale electricity rates have surged in many regions, with Bloomberg cited for a figure showing wholesale rates up as much as 267% compared with five years ago. Those price moves and connection bottlenecks are the immediate context for FERC’s orders.

Why it matters

The orders attempt to speed the mechanics of tying data centers into the transmission system even as the underlying generation shortfall remains unresolved. By mandating 30- and 60-day responses and opening consideration of alternative transmission technologies, FERC is prioritizing faster hookups for large electricity consumers. That addresses a logistical choke point for AI and cloud projects, which Secretary of Energy Chris Wright warned in October had been threatened by delays, but it does not add new generating capacity.

That distinction matters because the commission’s fixes target interconnection timelines and process, not the physical shortage of generation. The piece also notes broader policy moves that affect supply: the Trump administration said it would pay $765 million to Invenergy to cancel offshore wind leases near California, Maine, and New York; Invenergy said it would use that money to build natural gas plants in the Midwest and geothermal projects in the West. One Invenergy wind project would have generated as much as 2.4 gigawatts, enough at peak output to supply roughly 1.8 million homes. Altogether the administration has spent about $2.6 billion to cancel offshore wind developments, a set of actions that changes the supply picture.

What to watch

Watch the reports grid operators must file within 30 days about spare generating capacity and the rate defenses or revisions they produce within 60 days. Those filings will show whether operators can meet FERC’s timeline without new generation, and whether they adopt any of the alternative transmission technologies the commission asked them to consider.