PJM proposal would require data centers to bring their own power
PJM has proposed a new rule to federal regulators requiring new large-load customers, primarily data centers, to provide their own power supply to the grid. This aims to shift energy infrastructure costs from ratepayers to data centers, potentially altering Virginia's regulatory framework. Environmental groups are concerned about increased reliance on backup diesel generators and associated emissions.
PJM, the regional electric grid operator for much of the East Coast, has submitted a proposal to the Federal Energy Regulatory Commission (FERC) seeking a rule that would compel new large-load customers, mainly data centers, to provide their own power supply for the grid. This initiative is designed to tackle the escalating power demand, particularly in states like Virginia, where data center growth is anticipated to double energy needs within the next 15 years.
Under the proposed rule, data centers that do not "bring their own power"—either by directly funding new energy capacity or securing capacity through backstop power purchases—would be prioritized for transition to backup generators or asked to reduce loads during peak demand periods. The plan also delegates to individual states the authority to implement policies that direct large-load users to finance energy projects and ensure grid reliability.
The proposal has sparked criticism from environmental organizations, including the Piedmont Environmental Council and Sierra Club, who voice apprehension about a potential increase in carbon emissions from the more frequent use of backup diesel generators. These groups recently sent a letter to Virginia Governor Abigail Spanberger, urging her to establish rules mandating public notification when generators are activated and prioritizing Tier 4 generators along with air monitors to mitigate pollution. Dominion Energy, a significant utility in Virginia, has already responded to the rising demand by introducing a new rate class for large-load customers, which includes minimum demand charges for transmission, distribution, and generation costs. PJM’s comprehensive proposal is awaiting a decision from FERC within 60 days.