The Federal Energy Regulatory Commission (FERC) on Thursday ordered grid operators to fast-track interconnection requests from data centers and other large electricity users. In a unanimous vote, the commission directed six major grid operators to ensure that data centers can connect to the transmission system “in a timely and orderly manner.” Data centers will bear the costs of these interconnections.
Opportunities for Grid Tech Startups
FERC also opened the door for emerging grid technologies, instructing operators to consider “alternative transmission technologies.” While no specific technologies were named, the directive could encompass innovations like solid-state transformers and superconducting transmission lines, offering a potential boost to startups in the space.
Strict Deadlines for Grid Operators
Grid operators now face tight deadlines:
- 30 days to submit a report detailing available generating capacity.
- 60 days to “defend or revise” electricity rates within their regions.
FERC also directed operators to be more accommodating of behind-the-meter power for data centers—an increasingly popular workaround for tech companies unable to secure timely grid connections.
Capacity Shortages Persist
However, FERC’s directives did not address the underlying shortage of generating capacity. Grid connections have been slow partly because new power plants themselves struggle to interconnect. By the end of 2023, grid connection requests for power plants exceeded the total capacity of the existing fleet, meaning the queue was longer than the grid could theoretically serve.
This bottleneck comes amid surging demand: electricity consumption from data centers is expected to nearly triple by 2035. Grid operators, accustomed to near-zero demand growth over the past two decades, are straining under the load. PJM, the country’s largest grid operator, has seen tensions escalate, with major utilities threatening to withdraw amid the chaos.
Rising Costs and Public Sentiment
In response to interconnection delays, many tech companies and developers have turned to on-site, behind-the-meter power—typically more expensive and complex. Yet sufficient projects have connected to drive electricity prices sharply higher. Wholesale rates have risen as much as 267% compared with five years ago, according to Bloomberg.
FERC was prompted to act by Secretary of Energy Chris Wright, who warned in October 2025 that grid connection delays threatened U.S. competitiveness in AI. Since then, public sentiment toward AI and data centers has soured considerably, highlighting the growing disconnect between industry insiders and the broader public.
via TechCrunch AI