FERC orders a fast lane for data centre grid connections, but the electricity to fill them is another matter

The Federal Energy Regulatory Commission on Thursday ordered six major grid operators to fast-track interconnection requests from data centres and other large electricity users. Under the directive, approved unanimously, grid operators must demonstrate that data centres are “able to connect to the transmission system in a timely and orderly manner.”

Data centres will be responsible for paying the costs of their own interconnection. The commission also directed grid operators to consider “alternative transmission technologies,” a nod to startups developing solid-state transformers and superconducting transmission lines.

The queue problem

The orders address a bottleneck that has frustrated data centre developers and utilities across the country. Grid connection requests for power plants exceeded the total capacity of the existing fleet by the end of 2023, meaning the queue to get on the grid was longer than the grid itself could theoretically serve.

Grid operators now have 30 days to report how much generating capacity they have to spare, and 60 days to defend or revise electricity rates within their regions. FERC also directed operators to be more accommodating to behind-the-meter power, a configuration that tech companies have increasingly adopted out of desperation.

The urgency traces back to Energy Secretary Chris Wright, who in October warned that delays in data centre grid connections threatened to undermine US competitiveness in AI. Electricity demand from data centres is expected to nearly triple through 2035, and wholesale electricity rates have surged as much as 267 per cent compared with five years ago, according to Bloomberg.

PJM under strain

PJM Interconnection, the country’s largest grid operator, has become a cautionary tale. Covering 13 states, it has seen capacity auction prices jump from $28.92 per megawatt-day to $329.17 per megawatt-day in two years, adding an estimated $9.4 billion in costs.

American Electric Power, one of PJM’s major utilities, has openly discussed withdrawing from the grid operator entirely. Federal officials have even proposed breaking PJM into smaller entities to ease the pressure.

Community resistance is mounting in parallel. Grassroots groups blocked 75 data centre projects worth $130 billion in the first quarter of 2026 alone, organising around electricity costs, water consumption, and noise.

The supply gap

FERC’s orders addressed how data centres connect to the grid. They did not address where the electricity will come from, a problem that has already forced Denmark to pause all new grid connections after AI-driven demand overwhelmed its clean power grid.

On the same day, the Trump administration announced it would pay $765 million to Invenergy to cancel four offshore wind leases near California, Maine, and New York. One of the projects would have generated up to 2.4 gigawatts, enough at peak output to power roughly 1.8 million homes.

Invenergy said it would redirect the money toward natural gas plants in the Midwest and geothermal projects in the western United States. The Trump administration has now spent approximately $2.6 billion to scuttle offshore wind developments.

The juxtaposition captures the central tension in US energy policy. Washington is ordering the grid to accommodate data centres faster, while simultaneously paying to dismantle one of the few new sources of large-scale generation that could serve them.

Projects like Meta’s $200 billion gas-powered Hyperion campus in Louisiana show the scale of demand the grid must absorb. Whether the supply side can keep pace depends on decisions being made not at FERC, but at the White House.