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As the number of energy-hungry data centers used for artificial intelligence and cloud computing continues to increase in Pennsylvania and across the country, state officials are trying to develop regulations to ensure the stability of the electric grid.
The Pennsylvania Public Utility Commission recently voted to hold an April 24 hearing to explore the growing impact of data centers and other large-scale electric customers on the grid. The hearing will help to develop future policies, including a model tariff that will outline how these customers will connect to the grid and how the costs of needed upgrades will be shared to protect residential customers from large price increases.
Pennsylvania is seeing a growing number of announcements from companies that plan to develop data centers here using the state’s abundant energy resources. At the same time, regional grid operator PJM Interconnection is struggling to adapt to the changing landscape and meet the increasing demand. This has resulting in a spike in the wholesale price for electricity and intervention from Gov. Josh Shapiro to require PJM to make changes to protect residential customers.
The Center for Energy Policy and Management will explore the economic and energy impact of data centers during a free April 9 webinar. To learn more and register, click here.
The PUC hearing on the afternoon of April 24 will include representatives of major energy users, electric utilities, and consumer advocates to look at the challenges and opportunities large-load users present. Topics will include:
How to define large load customers, including appropriate megawatt (MW) thresholds
Requirements for deposits or financial security from new large load users
Cost-sharing and contributions toward necessary infrastructure upgrades
Minimum contract terms and exit or early termination fees
Timelines and costs associated with interconnection studies and agreements
Phased-in usage (load ramping schedules)
Tariff differences between firm service and interruptible customers
Backup generation and related standby rates
Transparent and equitable cost structures
Whether customers can self-fund and construct system upgrades, and how to account for that in tariffs
Opportunities for expedited interconnection
Best practices from other states or regions
Any other policies or procedures that support efficient and fair interconnections
“This is a critical moment for Pennsylvania’s energy future,” PUC Chairman Stephen DeFrank said in a release. “As we welcome new industries and evolving technologies, we need to strike the right balance – protecting consumers, supporting utilities, and fostering smart growth. This hearing is about making sure we have fair, transparent, and forward-looking rules to benefit everyone.”
Just this week, it was announced that a huge AI data-center campus powered by a massive, 4.5gigawatt (GW) , natural-gas fired plant is planned for the site of the recently demolished Homer City, Indiana County, coal-fired power plant, according to the Wall Street Journal.
TECfusions, a global data center operator, recently announced a new data center project in Upper Burrell, Westmoreland County, proposed to have 3 GW of electric capacity through on-site natural gas generation. A typical nuclear power plant generates 1 GW of electricity, so the scale of these projects is massive.
Microsoft also recently reached a 20-year agreement to buy power from a Three Mile Island nuclear reactor near Harrisburg that will be restarted. The electricity will be used to power Microsoft’s data centers. In addition, Amazon recently purchased a Talen Energy nuclear-powered data center campus in northeast Pennsylvania.
While these large data centers have the potential to advance economic development in Pennsylvania, they could also affect grid supply and reliability. PJM has been sounding warnings about the tightening supply of wholesale electricity due to rising demand and the retirements of fossil-fuel fired power plants that provide stable, around the clock supply. Most of the new energy projects planning to connect to the PJM grid are renewables, which do not offer the same baseload supply.
More details about the April 24 PUC hearing, including how to participate, will be announced soon on the PUC website.