PJM Market Monitor Wants Data Center Connection Restraint

The independent market monitor for PJM has filed a complaint with the Federal Energy Regulatory Commission asking it to require the regional grid operator to add large data centers only when they can reliably be served.

Monitoring Analytics claims in the complaint “that PJM is currently proposing to allow the interconnection of large new data loads that it cannot serve reliably and that will require load curtailments (black outs) of the data centers or of other customers at times. That result is not consistent with the basic responsibility of PJM to maintain a reliable grid and is therefore not just and reasonable.”

PJM, which serves 13 Mid-Atlantic states including Pennsylvania, is wrestling with how to add new power capacity more quickly and how power-hungry data centers should be allowed to connect to the strained grid. It plans to submit a proposal to FERC by the end of the year outlining how data centers should be connected without jeopardizing grid reliability or raising electricity prices for residential customers.

However, its stakeholders have not yet reached a consensus on how to do that. The market monitor is asking FERC to rule that PJM has the authority to allow data center interconnections only when they can be served reliably. “Such a ruling is necessary if PJM and its stakeholders are to develop reasonable rules to address the rapid addition of large new data center loads. PJM’s failure to clarify and enforce its existing rules and to protect reliable and affordable service in PJM is unjust and unreasonable,” the complaint states.

The market monitor notes that PJM has been short of meeting its reliability targets in the last two capacity auctions, while rapidly rising prices for wholesale electricity due to increasing demand have already cost PJM ratepayers $16.6 billion more. “Large data center load additions have already had a significant impact and will have additional significant impacts on other customers as a result of higher transmission costs, higher energy market prices and higher capacity market prices,” the complaint continues. The Pennsylvania Public Utility Commission recently alerted consumers that electricity prices would be rising in December for all utilities. This is the second jump in rates this year.

This comes as a new Bloomberg NEF forecast forecasts that power demand from data centers will rise to 106 gigawatts (GW) by 2035, a 36% increase from its previous outlook, which was published in the spring. The report notes that hyperscale data centers are getting bigger and more power-hungry.

The forecast indicates that certain power markets, including PJM, are reaching “tipping points” as planned new generation is failing to keep up with data center growth. “Pennsylvania is quickly turning into a major hub of gas-powered data centers, with large projects and policy incentives driving rapid capacity growth,” the forecast states.