In a significant development, four state governors, in collaboration with the Data Center Coalition (DCC), have proposed a plan that may benefit PJM Interconnection by expediting approval processes for data centers generating their own power.
The plan suggests a fast-track approval system for data centers and their built power sources. This initiative was discussed in a recent PJM hearing, the largest electrical grid in the U.S., which is tackling increasing demands and seeking federal approval to speed up permit reviews.
Pamela Quinlan, from GQS New Energy Strategies, representing DCC, described the eight-page proposal as a “voluntary and heavily incentivized” path for the industry.
Quinlan provided limited details at the PJM hearing near Philadelphia. Interest was sparked because the governors of Pennsylvania, Maryland, New Jersey, and Virginia, who have been critical of PJM but are pro data center expansion in their states, are behind the proposal.
According to the proposal, electricity produced by these centers would enhance PJM’s grid reliability. An energy researcher noted that the strategy might increase reliance on natural gas by the new data centers.
The DCC, a trade group for data center operators, includes major tech companies like Amazon Web Services, Google, Microsoft, and Meta, which have heavily invested in AI, requiring massive water and power.
Jacob Finkel, an aide to Pennsylvania Gov. Josh Shapiro, stated at the hearing that the states align strongly with the DCC proposal.
PJM’s application processing delays have frustrated governors in its 13-state service area. States like Delaware, Illinois, and Ohio may not have been consulted by Finkel.
The fast-track proposal aims to attract investment from tech and financial firms in pivotal states. States manage siting, permitting, and environmental reviews for projects needing grid access and assess land-use and construction approvals for electric lines and substations.
The DCC-governors proposal delegates permitting and siting acceleration to states. Under Quinlan’s plan, each state can expedite projects that develop energy lines or substations. Data center power sources can be located off-site but within the approved grid area.
Data centers qualify for fast-track if they generate power equal to their expected use. For instance, a site using 50 megawatts must secure 50 megawatts of supply to add to PJM’s grid upon launch.
The proposal promises to curb rising ratepayer bills by extending the current PJM capacity charge for another year, which could otherwise increase bills by 1.5 to 5 percent, depending on the area. The DCC suggests extending this cap into 2029.
Energy researcher Abraham Silverman praised the extension as a significant consumer win, shielding them from price spikes as data centers come online.
Details about the proposal remain sparse, leading analysts to call for more specifics on state review and fast-track decisions. Paul Sotkiewicz, president of E-Cubed Policy Associates, advised caution against bypassing processes that impact local communities.
Finkel mentioned that Pennsylvania and other states will form a consortium to implement the proposal. He cited Pennsylvania’s Lightning Plan as a model, although it remains in draft form.
Silverman highlighted concerns about the predominance of gas over renewable sources like solar in powering data centers. Joseph Bowring of Monitoring Analytics noted missing guarantees in the proposal, including which entities should face power cuts during grid stress.
PJM is considering over a dozen proposals to support a rule change request known as the Critical Issue Fast Path to add grid suppliers. PJM’s own proposal includes expedited reviews for 10 new projects annually, though critics argue it may favor gas-fueled developers.
The Federal Energy Regulatory Commission will decide on PJM’s request, with PJM’s board planning a December submission. At least three more meetings are scheduled through November.
Original Story at insideclimatenews.org