Sen. Kathy Frye Hester (D-Howard and Montgomery), pictured in February, said Monday that decisions made by PJM Interconnection about how it will handle expected data center growth are among the “most important decisions of this decade.” (Photo by Brian P. Sears/Maryland Matters)
A coalition of lawmakers from the 13-state PJM Interconnection unveiled its plan Monday to respond to the surge in requests for data centers in the region and the huge power demand that comes with them.
legislators' proposal builds on a plan proposed by a number of state governors in the region that would provide incentives for data centers to connect their own power generation to the grid and increase caps on a key PJM auction that partly influences consumer prices, among other reform attempts.
But lawmakers' plan also says that data centers that don't supply their own power should be the first to cut power in an emergency, rather than other power consumers, if power demand reaches the point where the system is stressed.
The proposals are in response to grid operator PJM's call for ways it can “address reliability and availability issues associated with rapid load growth resulting from the construction of large new data centers.” Maryland Sen. Kathy Frye Hester (D-Howard and Montgomery), one of the lawmakers present Monday, called PJM's data center decision one of the “most important decisions of this decade.”
PJM projects that peak load on the power grid will increase by 32 gigawatts from 2024 to 2030, with data centers accounting for all but 2 gigawatts of that growth. The resulting grid expansion will cost billions, putting even more strain on consumers' wallets as they face already high bills.
IN their proposalThe governors of Maryland, New Jersey, Pennsylvania and Virginia were joined by the Data Center Coalition, which represents data center companies as well as Exelon and PPL, utilities that serve millions of customers in several states in the PJM region. They called for data centers that supply their own power to have faster access to the electrical grid.
The lawmakers' proposal says data centers that don't supply their own power to the grid should be the first to be shut down when the system is overloaded.
“When there is a shortage of power, it affects both data centers and households,” said Claire Lang-Rea, a clean energy advocate at the National Resources Defense Council, who joined lawmakers in the statement. “We really need a proposal that takes that reality into account, although it is difficult.”
Lang-Ree said outages would be rare and would likely only occur when the grid is most congested, such as during very hot or cold weather. But for taxpayers, the protection can be significant.
“In practice, this may happen less than one-tenth of one percent of the time, but this action will protect the public from the risk of power outages and save hundreds of billions of dollars,” Lang-Ree said.
The various plans will be presented Wednesday at a meeting of a special committee of PJM members that will evaluate options. The final decision rests with the 10-member PJM Board of Governors, which has promised a decision by the end of this year. The board does not have to select any one proposal, but can combine elements from several.
Ultimately, any changes to PJM's procedures will require approval from the Federal Energy Regulatory Commission.
In a statement Monday, PJM spokesman Jeff Shields called the data center forecast a “generational challenge,” adding that the network operator has received a dozen different proposals on how to handle the issue.
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“The proliferation of data centers is driving the need for further development of our power grid and is also creating supply and demand imbalances leading to higher market prices,” Shields wrote. “As a network operator, PJM is acutely aware of the challenges these costs create for people and businesses.”
But lawmakers said PJM can't ignore the fact that it is partly to blame for supply and demand problems on its network.
“We also need to take a sober look back, realizing that much of how we got here is the past failure of the PJM pipeline with its six-year wait time to bring renewable energy online,” said Delaware General Assembly Senator Stephanie Hansen (D-10th District).
PJM says it has worked to reduce backlogs and reform approval processes that emerged at a time when fewer large power plants needed to connect to the grid, unlike today's far larger number of smaller projects, including wind, solar and battery installations scattered across the region. PJM has also created an expedited pathway for dozens of shovel-ready energy projects.
The idea of shutting down data center power was also supported by a group of 60 climate advocacy groups and ratepayers from across PJM. in a letter voting members of PJM. In Maryland, this includes the Chesapeake Climate Action Network, the Maryland League of Conservation Voters, and Maryland's Third Act.
These groups said the incentives that encourage data centers to supply electricity are not enough.
“You must vote for a solution that—at a minimum—prevents high-load users, such as data centers, from accessing the grid during peak demand hours until they bring new generation online that matches their power consumption,” the letter said.
The Office of the Maryland People's Advocate, which represents Maryland taxpayers, also supported this idea intermittent rather than stable power supply to data centers that do not supply their own power to the grid. He called on PJM to “initiate a process to require data centers to pay the regional and local transmission costs they generate,” costs that are currently paid by the entire customer base through their monthly power bills.
The People's Council also identified ways to improve forecasting to ensure demand for data centers is not artificially inflated by proposals that will not succeed, an idea supported by a coalition of lawmakers.
Independent market monitor PJM contacts regional network operator be even stricterand prevent data centers from connecting to the network if the system cannot reliably serve them. To do this, PJM will have to create a queue of applications for data centers and evaluate each proposal to make sure the electric grid can handle it.
“It should not be assumed that PJM is required to provide interconnection for large loads that cannot be served reliably,” the market report said. “The result of going this route will be an unreliable system that will impose costs on all other PJM customers.”
Hester on Monday called lawmakers' plan something of a “logical hybrid of two” proposals — the governors' proposal, which would simply provide incentives, and the proposal from an independent market watchdog.
“They [data centers] can join if they bring their own supplies,” Hester said. “And if not, then they settle for a non-guaranteed capacity market.”
Lawmakers highlighted the fact that their coalition includes legislators from seven PJM states and Washington, D.C., mostly Democrats but with a smattering of GOP members.
“It's just not very often that leaders in as many states as this come together in a bipartisan manner for a common fight,” said D.C. Councilman Charles Allen. “But it does highlight what's at stake for the millions and millions of people and businesses that will suffer if things continue the way they have been.”
