FERC Tells Grid Operators to Make it Easier to Connect Data Centers to the Grid

Show-Cause Order requires giving data centers the options for co-location or flexible loads 

WASHINGTON, DC – A new suite of orders from the Federal Energy Regulatory Commission (FERC) calls on transmission grid operators to offer new options to large load customers, potentially creating much-welcome regulatory certainty and transparency, as well as some safeguards to ensure that co-location won’t negatively impact the electric rates and system reliability of all other customers. As large energy load users, including data centers, seek faster connection to the power grid, co-locating with power plants, or committing to flexible operations, are promising compromises. 

“Addressing the rapid influx of new large loads requires speed, clarity, and transparency, and FERC’s orders today make meaningful progress on all those fronts,” said Caitlin Marquis, Managing Director at Advanced Energy United. “Importantly, FERC recognized that grid flexibility, advanced transmission technologies, and new co-located generating resources are critical to solving the challenge of accommodating large load. Now it is up to grid operators and the industry to respond to FERC’s directives quickly with workable, durable solutions that are fair for all customers.” 

Among the highlights: 

• The Order says grid operators must accommodate large loads either through co-location or through flexibility that allows for potential curtailment in times of peak energy demand. 

• The Order requires cost recovery agreements, and leaves states with the responsibility to ensure transmission costs flow to the large load customers and are not shifted to other customers.  

• The Order requires grid operators to examine installing advanced transmission technologies (ATTs) when making transmission upgrades. 

“Deploying more advanced energy technologies and enabling more grid flexibility are essential to meeting fast-rising energy demands, and we’re pleased to see the commissioners prioritize these solutions in their Order,” added Marquis. “These changes must be complemented by fixes to the generator interconnection process for energy projects, or supply won’t keep up with fast-rising energy demands. We look forward to working with state leaders and grid operators on reforming the grid-connection processes that are still too slow and unpredictable for this demand-growth moment.”