Texas passes rules temporarily disconnecting major data centers from power grid

U.S. policymakers are eyeing a tougher tactic to curb the surge in Big Tech’s electricity use. During grid emergencies, large data centers could be temporarily disconnected so homes and hospitals stay powered.

Texas acted first. In June, following the deadly 2021 winter freeze that left dozens dead, lawmakers told regulators to craft rules requiring utilities to curtail the biggest customers when supply tightens. The aim is to free enough capacity on a small number of extreme heat or cold days each year to prevent wider outages.

A similar discussion is now taking shape on the mid-Atlantic system, which spans 13 states, and in other regions as sprawling server farms are appearing faster than new generation can be permitted and tied into the grid.

The idea has drawn resistance from operators and major tech firms that rely on uninterrupted service around the clock.

Like many places, Texas still courts these projects for jobs and tax revenue, yet the power draw is formidable. Demand has climbed since the late-2022 launch of OpenAI’s ChatGPT set off a global sprint to build generative-AI services that require heavy compute.

“We’re going to see that kind of thing pop up everywhere,” said Michael Weber, a University of Texas engineering professor. “Data center flexibility will be expected, required, encouraged, mandated, whatever it is.”

Too many data centers, not enough power

Planners in Texas, the Great Plains and the mid-Atlantic have issued forecasts showing steep load growth over the next few years, with data centers a major contributor. PJM Interconnection, which manages the mid-Atlantic grid serving 65 million people and big clusters in Virginia, Ohio and Pennsylvania, has floated an approach akin to Texas.

The Southwest Power Pool, covering about 18 million people across Kansas, Oklahoma, and neighboring Great Plains states, says it must widen power-reduction programs, likely focusing on the largest users, to keep pace with demand.

These proposals arrive as electricity costs nationwide have been increasing at roughly double the inflation rate, federal data show, and as evidence mounts that ordinary customers may be subsidizing Big Tech’s outsized consumption. New plants and wires are not coming online fast enough, analysts warn.

“Data center load has the potential to overwhelm the grid, and I think it is on its way to doing that,” said Joe Bowring, who heads Monitoring Analytics, the independent market watchdog in the mid-Atlantic system, as mentioned in an Associated Press report.

Operators may need to change operations

Tech companies say they are squeezing more efficiency out of facilities and installing backup generation, often diesel, to ride through outages. But many did not expect to be asked to use that on-site power to help the grid during scarcity events, and they are watching closely as Texas regulators write the details.

The Data Center Coalition, representing major tech firms and developers, is urging flexible rules because some sites cannot switch to backup as quickly as others. The group also says any program should include payments for facilities that choose to power down during emergencies, said Dan Diorio of the coalition.

PJM’s newly released concept would mean proposed data centers might not be guaranteed electric service during a declared emergency. The suggestion has unsettled both generators and the tech sector.

“This is particularly concerning given that states within PJM’s footprint actively compete with other U.S. regions for data center and digital infrastructure investment,” the Digital Power Network, a group of Bitcoin miners and developers, said in written comments.

Governors of Pennsylvania, New Jersey, Illinois, and Maryland argued the idea is too unpredictable to serve as a lasting fix and should be paired with incentives for facilities to build their own power and cut load voluntarily. Consumer advocates said it would not meaningfully lower bills and urged a “bring your own generation” requirement so projects supply dedicated power.

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