FERC accelerates connections for data centers to the grid.

      TL;DRFERC has instructed six major grid operators to expedite interconnection for data centres, but this does not solve the fundamental issue of insufficient generating capacity. On the same day, the Trump administration allocated $765 million to terminate offshore wind leases, exacerbating the supply deficit.

      On Thursday, the Federal Energy Regulatory Commission mandated six major grid operators to prioritize interconnection requests from data centres and other large electricity consumers. This unanimous directive requires grid operators to ensure that data centres can connect to the transmission system promptly and in an orderly fashion.

      Data centres are to bear the costs associated with their own interconnections. The commission also encouraged grid operators to explore “alternative transmission technologies,” acknowledging the efforts of startups working on solid-state transformers and superconducting lines.

      The queue issue

      The orders aim to alleviate a bottleneck that has frustrated developers of data centres and utilities nationwide. By the end of 2023, requests for grid connections from power plants outpaced the entire capacity of the existing infrastructure, resulting in a queue that exceeds the theoretical service capability of the grid.

      Grid operators now have a 30-day window to report their available generating capacity and 60 days to justify or adjust electricity rates in their regions. FERC also urged operators to be more flexible regarding behind-the-meter power, a strategy increasingly adopted by tech firms due to necessity.

      This urgency reflects concerns raised by Energy Secretary Chris Wright, who stated in October that delays in connecting data centres to the grid could jeopardize US competitiveness in AI. Electricity demand from data centres is projected to nearly triple by 2035, while wholesale electricity prices have surged by as much as 267% compared to five years ago, according to Bloomberg.

      PJM facing challenges

      PJM Interconnection, the largest grid operator in the US, serves as a cautionary example. Operating across 13 states, it has witnessed capacity auction prices escalate from $28.92 per megawatt-day to $329.17 per megawatt-day in just two years, incurring an estimated $9.4 billion in additional costs.

      American Electric Power, a significant utility within PJM, has openly considered disassociating from the grid operator entirely. Federal officials have even suggested breaking PJM into smaller entities to alleviate the pressure.

      Resistance from communities is also rising. Grassroots organizations halted 75 data centre projects valued at $130 billion in the first quarter of 2026, mobilizing around concerns about electricity costs, water usage, and noise pollution.

      The supply challenge

      While FERC's orders focused on how data centres connect to the grid, they did not tackle the issue of electricity supply—something that has already compelled Denmark to freeze all new grid connections due to overwhelming AI-driven demand on its clean energy grid.

      On the same day, the Trump administration revealed it would pay $765 million to Invenergy to cancel four offshore wind leases near California, Maine, and New York. One of these projects had the potential to produce up to 2.4 gigawatts, enough at peak to supply around 1.8 million homes.

      Invenergy indicated it would redirect these funds toward natural gas plants in the Midwest and geothermal projects in the western US. The Trump administration has now used approximately $2.6 billion to terminate offshore wind initiatives.

      This situation highlights the fundamental tension in US energy policy: Washington is pushing for quicker grid adaptation for data centres but is simultaneously financing the dismantling of one of the few new large-scale generation sources that could support them.

      Projects like Meta’s $200 billion gas-powered Hyperion campus in Louisiana illustrate the enormity of the demand that the grid must meet. The ability of the supply side to keep pace rests on decisions being made not at FERC, but at the White House.