La orden de la FERC que rechaza la coubicación de una instalación nuclear y un centro de datos aumenta la incertidumbre y deja a las partes interesadas del centro de datos contemplando vías alternativas.

A recent decision by the Federal Energy Regulatory Commission (“FERC” or “Commission”) calls into question data centers’ access to sufficient electricity supplies to support their substantial and increasing electric demands. This decision, combined with FERC’s recent technical conference and other initiatives concerning co-locating large loads, has implications for the U.S.’s ability to maintain leadership in the artificial intelligence (“AI”) space and creates uncertainty about whether data centers will be able to interconnect to the U.S. grid on pace to meet demand. On November 1, 2024, two members of FERC’s five-member Commission rejected amendments to an amended interconnection service agreement (“Amended ISA”) that would have allowed the Susquehanna nuclear facility’s capacity to be dedicated to an on-site Amazon data center. In a 2-1 decision, the Republican members of the Commission (Christie and See) found that PJM Interconnection, L.L.C. (“PJM”), the grid operator responsible for filing the Amended ISA with FERC, failed to justify the requested amendments. FERC’s Democratic Chairman, Willie Phillips, dissented on the basis that the Amended ISA “represents a ‘first of a kind’ co-located load configuration that presents precisely the sort of specific reliability concerns, novel legal issues, and other unique factors that should have justified the filing of a non-conforming interconnection agreement.”  The remaining two Democratic members of the Commission (Rosner and Chang) did not participate in the decision.

November 1 Order

When PJM filed the Amended ISA on June 3, 2024, it set off an industry-wide response atypical of other filings of non-conforming interconnection agreements, which usually are non-controversial routine filings. The Amended ISA concerned the Susquehanna’s 2,520 MW nuclear generating facility that interconnects to the transmission system owned by PPL Electric Utilities Corporation within PJM’s region. Under the Amended ISA, Susquehanna would provide a co-located data center with all of its electricity needs such that the data center would not pull any power from the PJM grid.  PJM’s filing of the Amended ISA prompted multiple challengers to file protests with FERC, including several major utilities that argued, in part, FERC’s acceptance of the Amended ISA would lead to detrimental cost shifting at the expense of utility customers. Challengers argued that the data center would be allowed to benefit from PJM’s transmission system without paying for it – shifting an estimated $140 million in transmission costs to other PJM customers.

In addition to the Amended ISA proceeding attracting a host of comments and protests from interested parties, it also prompted the Commission to issue a deficiency letter requesting additional information from PJM and to convene a technical conference focused on issues presented by co-located data center load. FERC’s November 1 decision rejecting the Amended ISA largely avoided addressing many of the substantive and technical issues raised during the proceeding. Instead, FERC generally found that PJM had not adequately demonstrated how the Amended ISA’s proposed nonconforming changes were necessary changes from PJM’s pro forma ISA on file with FERC.  Under FERC’s rules, Transmission Owners like PJM are required to file interconnection agreements with the Commission if the agreements deviate from the Transmission Provider’s interconnection agreement on file with FERC (i.e., their pro forma agreement).  Because the Amended ISA contained non-conforming provisions, PJM was required to file it and have it approved by FERC.

The November 1 Order concluded that either existing or new generating resources in PJM cannot interconnect large co-located load behind-the-meter configurations through either a non-conforming amendment to an existing ISA or a new non-conforming ISA. Concerned over the equal treatment under the PJM Open Access Transmission Tariff (“Tariff”) of similar parties interested in pursuing large load co-location with existing generators, the Commission hinted at the idea that PJM should amend its Tariff to establish procedures for accommodating behind-the-meter large load configurations.  However, it is unclear whether PJM will pursue such changes to its Tariff given the possible impacts co-located load may have on resource adequacy in the PJM region as existing or proposed resources would inevitably “leave” the market to pursue serving co-located data centers.

If PJM does not make Tariff changes to accommodate behind-the-meter large load configurations, the November 1 Order creates uncertainty for stakeholders and may discourage the interconnection of large data centers into the grid. It is possible under this scenario that data center developers will look to true micro-grid configurations, where the data center and its generation resource(s) are “islanded” from the transmission grid. While these configurations present their own set of complications for data center developers, the bigger issue with islanding may be the impacts to the reliability of the grid as resources are diverted to serve co-located load and cannot be counted on for capacity reliability.

These issues are not limited to the PJM region. Other Regional Transmission Organization and Independent System Operators (“RTO/ISO”), outside of ERCOT, and transmission providers in non-organized markets will face similar uncertainty over accommodating behind-the-meter large load if they are unwilling to make the requisite tariff changes or if FERC declines to accept such tariff changes necessary to resolve these issues.  It is likely that the November 1 Order will result in additional filings by stakeholders searching for clarity on behind-the-meter data center configurations. This is an emerging issue that is unlikely to be resolved in the near future. Interested parties, including data center developers and operators, independent power producers, and regulated utilities will all be closely monitoring these developments for insights into FERC’s evolving policies in this area.

​U.S. Investments in Nuclear to Support Data Center Development

Over the past few months, the owners of several nuclear power plants have signed agreements to provide electricity to data centers. These include “behind-the-meter” deals directly linking operating nuclear plants with data centers.  Additionally, there are plans to restart decommissioned nuclear plants solely for data center use and to build new advanced reactors to power large tech company data centers. In October, a major utility announced the planned restart of a nuclear plant in Pennsylvania (Three Mile Island), and over 5,500 MW in new nuclear projects were revealed to solely support data center power needs. Nuclear energy is particularly attractive for data centers because it provides large-scale, reliable, carbon-free electricity.

On November 11, the White House released a road map that aims to at least triple the amount of U.S. nuclear power generation capacity by 2050.  According to the road map and corresponding framework, this will include deploying 200 GW of new nuclear energy capacity through the construction of new nuclear power plants, uprating existing plants, and restarting reactors that have been retired. Construction of new reactors aims to incorporate small modular reactors (“SMRs”).  As noted in the framework, “SMRs have strong potential for both grid-based and behind-the-meter resilient electricity,” which has led many to assert SMRs could be paired well with on-site data centers. To date, SMRs have not yet been commercially demonstrated in the U.S., however, they are in the process of being developed.  In October, Kairos Power and Google announced an agreement to eventually build up to seven SMRs totaling up to 500 MW of power.  Kairos Power’s test reactor is expected to be completed by 2027.

Data Center Planning and Reliability Issues

Stakeholders in this space are constantly reminded of the vast quantities of electricity large data centers can consume. According to the Electric Power Research Institute, data centers currently account for around 4% of U.S. electricity usage, however, they could demand up to 9% by 2030.  This increasing surge in demand is putting pressure on utilities to meet national electricity needs and raises concerns over rising household electricity costs tied to this demand. U.S. Secretary of Energy Jennifer Granholm recently encouraged tech companies to generate their own energy for data centers. And the White House created a Task Force on AI Datacenter Infrastructure to focus on data center development, in part, to protect national security interests. Whether developed and integrated to the U.S. grid through traditional interconnection queues or developed through an islanding micro-grid configuration, data center developers and their investors are faced with navigating a complex landscape of regulations, energy pricing, and grid reliability to make these projects feasible.

As the proliferation of AI shows no signs of abating, the issue of reliability and co-location of data centers will become increasingly critical to the nation’s energy policy and planning. FERC’s November 1 decision introduces the type of uncertainty that may hinder the U.S.’s ability to keep pace with data center demand and further strain the already overburdened U.S. electric grid. Upcoming leadership changes at FERC, Congress, as well as the new incoming Administration may add to this uncertainty. Without proper planning and timely innovation, the issues presented by data centers’ increased electricity demand could lead to major reliability concerns. As FERC Chairman Phillips began his dissent, the November 1 Order “is a step backward for both electric reliability and national security.”