FERC Orders Data Center Plans from Grid Operators

On June 18, the Federal Energy Regulatory Commission (FERC) approved orders to help fast-track power projects for hyperscale data centers. The new orders aim to reduce the time for approving new projects to just 90 days, representing a vast improvement over approval queues that can take years.

FERC issued the orders under section 206 of the Federal Power Act to the six regional grid operators in the U.S. under its jurisdiction. These grid operators have been directed to justify or reform the rules that govern how data centers, manufacturing facilities, and other large energy users connect to the electric grid. Utilities have 60 days to report to FERC.

The regulatory body has issued five categories of reform for utilities to address:

• Developing efficient transmission service application and study processes, including consideration of alternative transmission technologies
• Preventing cost shifting and requiring transparency into transmission costs
• Accommodating co-location agreements and behind-the-meter generation
• Providing new transmission services for flexible large loads
• Developing a process to study generating facilities that serve electrically proximate large loads and co-located loads

FERC has also asked that each operator submit detailed reports within 30 days describing how they intend to ensure that adequate generation will be available to serve existing and new large power load demands.

For data center developers, the orders could help clarify and speed up a process that constrains growth. However, faster interconnection may not necessarily mean easier access to power. In many regions, data center demand is rising faster than grids can add generation and transmission capacity. As a result, operators may be required to bring their own power, rely on behind-the-meter generation, reduce electricity use during periods of grid stress, or pay for upgrades needed to serve their facilities.

Those tradeoffs could reshape how data centers are planned, financed, and operated. Access to reliable power is becoming a central factor in site selection alongside land availability, tax incentives, fiber connectivity, and cooling resources. Locations with available transmission capacity, nearby generation, or flexible load-management options may become more attractive as operators look to reduce energization delays and cost uncertainty.

The orders come as the rapid growth of AI and cloud computing is putting new pressure on U.S. power markets after years of relatively flat demand. Data centers can require electricity loads comparable to those of small cities, creating planning challenges for utilities and grid operators responsible for maintaining reliability while limiting upward pressure on consumer bills.

FERC's approach stops short of imposing a single national rule. Instead, it gives regional grid operators flexibility to develop policies suited to local market conditions while signaling that large-load interconnection is now a major reliability, economic, and political issue.

For data center operators, securing grid access may become faster but not simpler. Developers will need to account for power availability, interconnection requirements, curtailment risk, generation strategy, and potential grid-upgrade costs much earlier in the project lifecycle.