PJM Interconnection has proposed a controversial plan to prioritize data centers for power curtailments during grid emergencies, sparking widespread opposition from stakeholders across the energy sector. The proposal would classify new data centers over 50 MW as “non-capacity-backed load,” allowing the grid operator to cut their power before implementing broader emergency measures. Industry groups, utilities, and tech companies have overwhelmingly criticized the approach as legally flawed and potentially counterproductive.
Stakeholders overwhelmingly oppose the NCBL proposal
The PJM Interconnection’s initial proposal for adding data centers to its system drew a range of concerns from the grid operator’s market monitor, independent power producers, utilities, data center companies, and others, according to Utility Dive. The issue centers on PJM’s fast-track stakeholder process to develop rules by the end of the year for interconnecting data centers to its system while ensuring the region has enough power supplies.
In a first step in the Critical Issue Fast Path initiative, or CIFP, PJM staff on Aug. 18 released a conceptual proposal for tackling the issue. The proposal centers on treating new data centers over 50 MW as “non-capacity-backed load,” or NCBL. PJM would seek voluntary participation, but could require it if there is a capacity shortfall caused by large load additions.
Data center companies reject the framework
“It exceeds PJM’s jurisdiction, undermines the integrity of its market framework, introduces fundamental contradictions in tariff application, relies on unsupported assumptions, and lacks the detail necessary for customers to even evaluate technical and operational feasibility,” said the Data Center Coalition, a trade organization representing some of the largest players such as Google, Meta, and Microsoft.
Amazon Data Services urged PJM to drop the NCBL proposal and instead focus on how to improve demand forecasting, strengthen regional transmission planning, improve the grid interconnection process, and provide ways for data centers to voluntarily bring their own energy resources to the grid in exchange for faster load interconnection timelines.
Legal and market concerns raised
The proposal isn’t viable, and will shift costs onto non-NCBL data center load, according to Monitoring Analytics, PJM’s market monitor. It appears unlikely that data centers that want 99.999% uptime would accept having their load curtailed, Monitoring Analytics said. “If PJM adds 10,000 or 20,000 or 30,000 MW of large data center loads, all without adding matching capacity, the expected frequency of interruptions will increase significantly,” the market monitor said.
Some power suppliers also panned the NCBL proposal. Baltimore-based independent power producer Constellation Energy, for example, said it is riddled with legal flaws. “They include: massive jurisdictional overreach by dictating the terms on which retail customers can receive retail service and eviscerating utilities’ state-law obligation to serve new load,” Constellation said.
States seek alternative approaches
With the explosive growth of Big Tech’s data centers threatening to overload U.S. electricity grids, policymakers are taking a hard look at a tough-love solution: bumping the energy-hungry data centers off grids during power emergencies, according to Finance & Commerce. Texas moved first, as state lawmakers try to protect residents in the data-center hotspot from another deadly blackout, like the winter storm in 2021, when dozens died.
The governors from Illinois, Maryland, New Jersey, and Pennsylvania said the proposed NCBL may be unpredictable and produce unintended results. More broadly, the governors called for more accurate load forecasting, interconnection improvements for “energy only” resources and resources that would supply large loads, and better regional transmission planning.
The controversial data center curtailment proposal by PJM is increasingly being opposed by the various participants in the entire energy industry, as people question the legality of the proposal and its effects on markets. Critics of the plan suggest alternative action that emphasizes better forecasting, transmission planning, and voluntary participation, instead of load shedding, which is mandatory.