Supporters of co-locating large loads with generators want FERC to move quickly on rules on the construct, while opponents urged the commission to take its time and make sure it gets the rules right, according to comments filed ahead of a Dec. 9 deadline (AD24-11). 

The commission had solicited comments on a technical conference held in November on the issue. (See FERC Dives into Data Center Co-Location Debate at Technical Conference.) 

Google told FERC that it is not seeking to avoid paying its fair share of the costs of major new data centers, but that rapid demand growth and slow additions of new supply means the option should be preserved. 

“At Google, we … want to partner in building systems that will support the nation’s growing needs in a reliable, secure and cost-effective manner,” the firm said. “Co-location arrangements should not be a means to bypass paying for necessary infrastructure, but instead a mechanism to advance well-coordinated and deliberate planning and include appropriate mechanisms to ensure other grid customers are insulated from the impacts of any co-location arrangement.” 

Co-location can help timely integrate new load and generation, but it is not a substitute for the broader infrastructure investment needed to support load growth, Google said. Ideally, the company wants to use co-location with new generation, but interconnection backlogs have delayed many of those projects. 

Another major issue with the growth of data centers is load forecasting uncertainty. Google suggested that FERC require large load developments to make material, upfront commitments before they are included in RTO forecasts. 

“For example, as part of their load forecast verification processes, RTOs could require [utilities] to verify that all new large loads have made material upfront financial commitments to be included in load forecasts that underpin near-term (e.g., five-year time horizon) generation and transmission planning tools,” Google said. 

The same day the tech giant filed its comments with FERC, it announced a partnership with Intersect Power and TPG Rise Climate to build new data centers co-located with new generation. (See Google Aims to Co-locate New Data Centers with Clean Power Projects.) 

“The partnership will pair new data center facilities with new carbon-free energy resources, with both the load and generation grid-connected and planned in collaboration with relevant grid operators,” Google said. 

Intersect also filed comments, saying FERC’s approach needs to create clarity but avoid impairing future industries and innovations in setting some rules of the road. 

“The absence of standard rules, practices and procedures for integrating co-located with new and existing generation (including tariff language and, where necessary, pro forma interconnection agreements and procedures) means co-location configurations must go through a laborious, unpredictable, semi-discretionary process to interconnect,” Intersect said. “This risks losing the interconnection and transmission efficiencies co-location can otherwise offer.” 

FERC should support fully isolated, co-located load by recognizing that no transmission rate responsibility is appropriate because to do otherwise would eliminate incentives for large loads to limit their impact on the rest of the grid, Intersect said. However, co-location setups will vary, and FERC should ensure its rules are flexible. 

PPL has one of the first co-located loads on its system, in the form of an Amazon data center at Talen Energy’s Susquehanna nuclear generating station, and it said FERC needs to move quickly to set some rules of the road. (See FERC Rejects Expansion of Co-located Data Center at Susquehanna Nuclear Plant.) 

“The easiest solution to the dilemma of behind-the-meter co-located load would be to prohibit it,” PPL said. “If the rule was simply that any interconnected load must be served by a public utility, the location of the meter would be irrelevant. Load would likely still co-locate with generation to take advantage of the high levels of reliability on the high-voltage system and to avoid costly transmission upgrades, but that would not itself cause additional reliability or cost-shifting concerns.” 

FERC likely cannot prohibit co-location because it lacks direct jurisdiction over customers, with Pennsylvania law allowing the Susquehanna deal to go forward, the company said. 

“Although these loads are end-use customers, and not directly subject to the commission’s jurisdiction, they can reach a gigawatt or more in size,” PPL said. “This is two orders of magnitude bigger than the largest retail loads typically interconnected with the electric grid and … more akin to medium-sized cities appearing rapidly on the system.” 

Dominion Energy’s main utility serves one of the largest data center markets in the world in Northern Virginia and also owns a merchant nuclear plant, the Millstone facility in Connecticut. 

“Proper planning and monitoring must be in place to facilitate co-location configurations,” Dominion said in its comments. “Due to their significant size, co-located loads can cause operational challenges and impact reliability in certain scenarios.” 

If the load drops off while the generator is connected to the grid, it will push hundreds of megawatts onto the system, requiring an operational response, or the generator could turn off and lead to a sudden boost in demand, the company said. The impacts on transmission and resource adequacy need to be studied. 

“Ideally, the commission should provide the option and flexibility to large load customers to co-locate with new generation,” Dominion said. “Co-located load with new generation configurations, if structured properly, can provide several benefits to the grid.” 

Constellation and Exelon’s Dispute Continues in Comments

Constellation Energy and Exelon have been very active in the debate about co-location. The two firms used to be one, so all of Constellation’s nuclear plants where it has explored co-location are in Exelon’s utility territories.  

Constellation urged FERC to move quickly and adopt new rules. 

“The rules for connecting and serving new large load such as data centers will significantly impact whether those customers come to PJM, another region or another country, who bears the cost of connecting and serving that load, and how resource adequacy will be ensured,” it said. 

One thing both sides of the argument agreed on at the conference was that resource adequacy underlies co-location. Constellation argued that the challenges of serving new load are the same regardless of whether it locates behind a generator’s meter or to the grid. FERC can do a rulemaking or policy statement to deal with the issues, but Constellation urged it to quickly act on a complaint it filed seeking changes to PJM’s rules. (See Constellation Complaint Seeks Formal Data Center Co-location Rules.) 

“Opponents of prompt action likely will argue that enabling fully isolated co-located load configurations would impair reliability or raise prices for others,” Constellation said. “As was clear from discussion at the technical conference, concerns regarding the impact of load growth on reliability and prices are the same regardless of the new load’s choice of configuration.” 

Constellation has argued that the co-location deals it is pursuing will not use the grid, but it said it was open to FERC looking into whether such deals still have the customer using some grid services. 

“If the commission believes that PJM’s current rules on netting, generator payment for ancillary services or other [matters] must be changed, those discussions should be conducted and resolved as quickly as possible to provide regulatory certainty,” Constellation said. 

Exelon filed joint comments with East Kentucky Power Cooperative and Southern Maryland Electric Cooperative, which also argued for prompt action. 

“These generation units are supported by our electric grid — a network that is relied on, and has been paid for over many decades, by the American public,” they said. “Broad consensus emerged during the technical conference that the parties to co-location arrangements should pay their ‘fair share’ of that grid and the costs of keeping it safe and reliable, without unreasonable cross-subsidization by the consumers who have long supported it.” 

The issues around artificial intelligence and its future go well beyond FERC’s purview and will also need to involve the White House and other agencies, they said. 

“New policies providing special treatment exclusively for co-located data centers are not needed for the data center industry to thrive — whether in the name of national security or otherwise,” they said. “In contrast, promoting a regulatory environment that hastens the development and interconnection of generation and transmission infrastructure for all end users, rather than a small subset, will benefit domestic development of AI and other industries that have a national security interest.” 

Two Consultants with PJM Experience Weigh in

Susanne Glatz and Abraham Silverman, consultants who worked in and around, respectively, PJM for years, filed comments arguing that data center co-location deals might appear the same as other load interconnections from an engineering perspective, but not a regulatory or transmission cost allocation perspective. 

Generators do not pay for transmission service, while grid-connected loads with on-site generation do, and they have vastly different rate impacts. 

“To be fully isolated, a facility must disconnect from the grid,” they said. “Some commenters have suggested a co-location load is fully isolated when protection devices are installed to prevent the load from taking power from the grid. This does not constitute isolation and does not change the fact that the co-location configuration is connected to the grid and using the grid. Otherwise, a generator would simply isolate from the grid and serve the load directly.” 

They suggested FERC put such arrangements in the same processes that account for other changes in system load to ensure that they are treated equally. Another option would be to put co-location deals in the interconnection process. 

“This option requires updating the interconnection process,” they said. “For example, the current interconnection processes do not, and are not designed to, account for behind-the-generator-meter-connected load. New tariff requirements would have to be developed in order to incorporate the additional data needed to account for addition of the customer load and other electrical parameters of the customer facilities needed to perform reliability studies.”