Critics intensely oppose plan for linking data centers in PJM region

PJM Interconnection, the grid operator for 13 states and the District of Columbia, has proposed a conceptual plan to treat new data centers over 50 MW as "non-capacity-backed load" (NCBL). This move has sparked a wave of opposition from various parties, including data center companies, utilities, and independent power producers.

The proposal, unveiled on August 18, centers on the idea of classifying large data centers as NCBL, a move that could have significant implications for the region's power supply and market framework. Critics argue that the proposal exceeds PJM's jurisdiction, undermines the integrity of its market framework, and lacks detail.

One of the main concerns is that the NCBL classification could cap capacity prices, potentially eroding investor confidence needed for new power plant financing. For instance, the East Kentucky Power Cooperative has voiced its apprehension, fearing that the proposal could jeopardize the financial viability of new power plants.

Advanced Energy United, a trade group for clean energy companies, shares similar concerns, expressing worries that the NCBL proposal may not meet PJM's goals and could lead data centers to seek connections outside of PJM. This could disrupt the balance of the power grid and potentially undermine the region's energy reliability.

Exelon, a utility owner across PJM, has urged PJM to withdraw the NCBL proposal due to its potential jurisdictional overreach and violation of North American Electric Reliability Corp. standards. LS Power, another critic, believes the measure would fail to ensure long-term reliability, arguing that it does not sufficiently address the root causes of reliability challenges or incentivize necessary investments in generation capacity.

Despite the criticism, the proposal aims to develop rules for interconnecting data centers to PJM's system by the end of the year, ensuring the region has enough power supplies. The Electricity Customer Alliance, however, suggests a phased approach, with the first stage focused on measures to help stabilise prices in the 2028/29 base capacity auction.

The governors from Illinois, Maryland, New Jersey, and Pennsylvania have also weighed in, calling for more accurate load forecasting, interconnection improvements for "energy only" resources, resources supplying large loads, and better regional transmission planning.

PJM held a workshop on the issue on Tuesday and is set to hold the next meeting on September 15. As the debate continues, it remains to be seen how PJM will address the concerns raised by various stakeholders and move forward with its plan.