A coalition of governors and the data center industry unveiled a plan in October to fast-track the grid approval for new power generators, cutting the interconnection study process to as little as 90 days to enable the construction of new data centers. The joint proposal is the latest in a string of efforts aimed at accommodating the boom in data centers without further undermining grid stability.

Under the voluntary program, data centers would need to obtain generating capacity to cover each megawatt of load via uprates to existing generators, development of new facilities, or facilities that failed to clear the capacity market. Projects would be subject to PJM interconnection studies of between 90 to 180 days.

The proposal also calls for extending by one year the price collar on PJM’s capacity market, which was imposed to limit price spikes driven by soaring demand from data centers. The floor and cap, set at $175/MW-day to $325/MW-day, was due to expire after the 2027/2028 Delivery Year.

Pushing the plan are the governors of Pennsylvania, Maryland, New Jersey, and Virginia, which lead states that are major or growing data center hubs. They are joined by the Data Center Coalition (DCC), the lead industry group representing the major tech companies from Microsoft to Amazon.

Proponents argue that if executed and widely adopted, the proposal would help alleviate the persistent supply constraints plaguing PJM that have raised risks to system reliability and pushed capacity prices to historic highs. The plan also in some respects aligns with the position of the market monitor, Monitoring Analytics, which said in August that new data centers looking to go online need to have corresponding generating capacity given the dearth of new generators getting added to the grid.  

“Resources brought forward by large load customers would receive expedited interconnection treatment by PJM, conceptually similar to PJM’s proposed Expedited Interconnection Track (EIT),” according to the proposal dated Oct. 24.

The EIT refers to PJM’s plan in Oct. 1 to give a shortcut to state-sponsored generators with more than 500 MW of capacity to meet rising data center demand.

The proposal, however, leaves questions unanswered. While fast-track approvals provide a compelling incentive for tech companies desperate to get more facilities online quickly, participation may be limited by a developer's ability to secure generating capacity. Renewable projects are caught in long interconnection queues, while new gas plants face a historic backlog of orders resulting in years-long wait times.

The plan comes on the heels of other efforts to manage the industry's unhinged load growth trajectory. In October, the U.S. Energy Department directed FERC to fast-track a rule that would expedite the approval of data centers that agree to be curtailable or have their corresponding generation be dispatchable. In August, PJM pushed forward a plan to treat data centers as “non-capacity-backed load,” or NCBL, in which the facilities would be curtailable during system emergencies.

The historic load growth, and accompanying high energy and capacity prices, have helped propel renewable contracts in PJM. A 10-year as-generated solar PPA for delivery in PJM’s benchmark Western hub reached over $90 MWh on Nov. 4, according to Pexapark data, the most in at least 12 months.

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