The Federal Energy Regulatory Commission (FERC) has initiated a review of the co-location of power generation facilities with large energy consumers, such as data centers, within the Pennsylvania, New Jersey, and Maryland (PJM) Interconnection region. This review focuses on PJM, the largest U.S. grid operator, due to the rising number of co-location proposals in the area.
A notable example is Amazon Web Services (AWS), which has proposed co-locating its data center with Talen Energy’s Susquehanna Nuclear Plant in Pennsylvania. AWS intends to purchase power in 120 MW increments from the plant. FERC recently rejected the proposed interconnection agreement between AWS and Talen, prompting a technical conference to explore the implications of such co-locations at generating facilities.
FERC is combining findings from the conference with a complaint from Constellation Energy, which argues that PJM’s co-location rules are unclear and unfair, particularly regarding how generators should supply power to on-site customers that are not connected to the broader grid. FERC Chairman Mark Christie emphasized the need for quick action to address these concerns.
The review will assess whether PJM’s rules for large users at power plant sites are fair and clear. The debate centers on whether these large users should contribute to grid services and the impact of their presence on grid reliability and costs. Supporters argue co-location reduces the need for costly grid upgrades, while critics worry it could lead to unforeseen demands on the grid and higher costs for other consumers.
Utilities and state regulators point out that co-located facilities still benefit from grid services such as voltage control and backup power, raising concerns about fairness and cost shifts. Some suggest financial commitments from large loads to improve planning accuracy, while others fear that such requirements could deter investments in new generation.
FERC has given PJM and transmission owners 30 days to either justify or revise their current rules. The outcome of this review could significantly influence how co-location arrangements are regulated in the future.
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