Mid-Atlantic power grid operator finalizes key data center interconnection and regulation framework.
The PJM Interconnection – the regional power grid operator for Maryland and 12 other states and DC – is finalizing consequential decisions around how it will handle the electricity demand of data centers. The PJM Board of Managers is expected to vote on a final decision in the coming days based on recommendations from PJM members, which includes entities like generation owners and utility companies.
On June 30, PJM members voted on two key data center policies: the Reliability Backstop Procurement and Connect and Manage. The Reliability Backstop Procurement governs contracting with new power plants, while Connect and Manage dictates how PJM will handle situations where demand for power exceeds available supply.
Under the Reliability Backstop Procurement recommendation, PJM members are proposing a policy that ensures the general public will not bear the cost of new power plants needed to support data center generation needs. Instead, payment for those plants will fall to the utilities providing power and the generators themselves. Tom Rutigliano, a senior advocate with the Sustainable FERC Project at the Natural Resources Defense Council (NRDC), emphasized the significance of this approach: "We were really worried about that because there was this risk that we'd build power plants on the public dime for data centers, and then if the data centers didn't show up or things changed, it could show up in everyone's bills."
The situation around Connect and Manage proved more contentious, as PJM members could not reach consensus on how to handle the strain that an influx of new data centers continues to place on the regional grid. However, members did agree that PJM should take the lead in developing a solution. As Rutigliano explained, "Stakeholders pretty clearly told PJM, 'No, you need to be in the lead on this, and you need to come up with a way that we can be sure if there's a shortage of power, the data centers are the ones who get turned off first, rather than just ordinary people and residential customers.'"
The PJM Board is expected to vote on its final decision shortly and will file the new policies for approval with the Federal Energy Regulatory Commission (FERC). The NRDC anticipates that the policies will go into effect this fall.
These federal regulations will coincide with Maryland's own "Voluntary Clean Capacity Rating Program" for data centers, created under the state's Utility RELIEF Act. The program creates incentivization tiers for data centers seeking to establish operations in Maryland. Projects that cover 80 to 100 percent of their peak generation needs with clean energy, pay prevailing wage to construction workers, and meet other requirements will receive priority when connecting to the grid. The Maryland Public Service Commission is also establishing a registration process requiring data centers to disclose information relevant to the electric system and local planning.