US Acts to Accelerate Power Grid Hook-Ups for AI Data Centers

High voltage power lines run through a sub-station along the electrical power grid in Miami. Photo by Joe Raedle /Photographer: Joe Raedle/Getty I

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(Bloomberg) — US regulators have taken their biggest step yet to speed the connection of data centers to the country’s grids while simultaneously attempting to slow surging utility bills that have angered Americans.

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The Federal Energy Regulatory Commission approved a series of orders Thursday tailored to the country’s power grids in a bid to remove bottlenecks that had risked slowing the AI boom. The aim is to handle requests for power within 90 days, which would be a dramatic acceleration of a process that currently can take years. 

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The fast-tracking will come with tradeoffs for AI hyperscalers. Under the plans, they could be required to bring their own power or curtail demand during times of high stress on the system. They will also be on the hook for costs associated with needed grid upgrades so they can receive vast quantities of electricity, according to Laura Swett, chairman of the Federal Energy Regulatory Commission.

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“This is the biggest priority our country is facing at the moment,” Swett said. “We are taking historic action to push our country’s electric markets and economy into the future.”

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The six regional grid operators and their transmission owners must, within 60 days, either justify tariffs that do not clearly address large-load customers or submit proposed revisions, according to a FERC fact sheet.

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The order comes amid pressure from the Trump Administration to ensure AI becomes the backbone of the American economy, and highlights the surging demand in power markets after two decades of stagnation. At the same time, the data center buildout and the inflationary impact it has had on consumer power bills have become hot-button election issues ahead of the mid-terms in November.

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FERC’s moves follows a call last year from US Energy Secretary Chris Wright for expedited reviews for data-center grid connections and a broader framework for accelerating access to power supplies.

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The data center buildout presents both opportunity and risk: Technology companies could help finance grid upgrades, but their power needs are arriving faster than the system can adapt. Data centers can add the electricity demand of a small city within a few years, forcing grid operators to meet large new loads without increasing the risk of shortages or blackouts.

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While various US grids have attempted to address concerns over ensuring data centers are connected with electricity generation, while keeping costs in check, the rollout of such policies have been inconsistent. PJM Interconnection LLC, the largest US grid covering 13 states and 67 million customers, has come under particularly heavy criticism for being slow and seeing power bills surge.

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That mismatch is something FERC is now trying to rectify, though it stopped short of a blanket rule for the whole country. Swett said it was now up to state legislators to ensure that costs are allocated evenly. This approach provides flexibility to grid operators to address their region-specific conditions, New York Independent System Operator spokesman Kevin Lanahan said in an email.

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“We’re out of the wild west era of data center development,” said Robert Montejo, a partner at law firm Duane Morris LLP. “This order may be remembered less for its technical reforms and more for recognizing that large-load interconnection is now a core political, planning, and economic issue.”

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