“Data centres may be digital infrastructure, but their future is constrained by physical infrastructure: transmission capacity, generation availability, interconnection rules, and the practical limits of the electric grid.” – MJ Martin
Introduction
The rapid growth of artificial intelligence, cloud computing, and digital infrastructure is forcing North American power systems to confront a new class of electrical load. Large data centres are no longer ordinary commercial customers. They can require hundreds of megawatts of firm, high quality electricity, often on schedules that are much faster than traditional utility planning cycles. In response, the Federal Energy Regulatory Commission has ordered major U.S. regional grid operators to take aggressive and targeted action to modernize the way large energy users connect to the transmission system. The central issue is not whether data centres should receive power, but how the grid can serve them without compromising reliability, fairness, or cost discipline. (TD World)
The FERC Action
FERC issued orders under Section 206 of the Federal Power Act to the six regional transmission organizations and independent system operators under its jurisdiction. These include PJM, MISO, SPP, CAISO, ISO New England, and NYISO. Each organization now has 60 days to either prove that its existing tariff rules remain just and reasonable for large load interconnections, or file changes to address FERC’s concerns. The unanimous 5 to 0 vote signals that the Commission views this issue as urgent, bipartisan, and central to the future operation of the electric grid. (TD World)
Why Data Centres Are Different
Large data centres create planning challenges because their electrical demand can arrive quickly, cluster geographically, and remain constant for long periods. Unlike traditional industrial growth, data centre expansion is being driven by massive investment in artificial intelligence and digital services. Some facilities may also use co-located generation or behind-the-meter resources, creating more complicated operational and jurisdictional questions. FERC’s position is that these new load profiles require connection rules that are more transparent, more flexible, and more technically rigorous than older tariff structures.
Key Reform Areas
The orders direct grid operators to address several major areas of reform. These include faster and more efficient transmission service application processes, improved study methods, and consideration of advanced transmission technologies. FERC also wants stronger safeguards to prevent costs from being shifted unfairly to ordinary consumers. The Commission is placing emphasis on transparency so that utilities, large load customers, regulators, and the public can understand who pays for network upgrades and why those costs are necessary.
Another major theme is flexibility. FERC is asking grid operators to consider new transmission services for flexible large loads, including arrangements where customers can reduce consumption during grid constraints. The orders also address co-location agreements, behind-the-meter generation, and the need to study generating facilities that serve nearby large loads.
Consumer Protection and Grid Reliability
Supporters of the FERC action argue that it balances economic development with consumer protection. Data centres are increasingly important to national security, digital infrastructure, and economic competitiveness, but their growth must not undermine reliability or raise costs for other customers without proper scrutiny. FERC appears to be encouraging a regional approach rather than a single national template, recognizing that each grid operator faces different resource mixes, load growth patterns, transmission limits, and regulatory structures.
A Broader Infrastructure Bottleneck
The article also highlights the scale of the problem facing the data centre industry. J.P. Morgan has reported that a large share of planned 2027 data centre capacity has not yet started construction, while several major projects have already been cancelled because of permitting and infrastructure constraints. One of the biggest obstacles is the ability of developers to secure enough electric power from utilities in time to support project schedules.
Summary
FERC’s action represents a major policy intervention at the intersection of transmission planning, large load interconnection, consumer protection, and digital infrastructure. The message is clear: data centres need power, but the power system cannot be treated as an unlimited plug-in resource. Grid operators must modernize their rules, study the system more intelligently, use existing infrastructure more effectively, and protect consumers from unfair cost impacts. The outcome may shape how quickly artificial intelligence and cloud infrastructure can expand, and how reliably the electric grid can support that expansion.
About the Author:
Michael Martin is the Vice President of Technology with Metercor Inc., a Smart Meter, IoT, and Smart City systems integrator based in Canada. He has more than 40 years of experience in systems design for applications that use broadband networks, optical fibre, wireless, and digital communications technologies. He is a business and technology consultant. He was a senior executive consultant for 15 years with IBM, where he worked in the GBS Global Center of Competency for Energy and Utilities and the GTS Global Center of Excellence for Energy and Utilities. He is a founding partner and President of MICAN Communications and before that was President of Comlink Systems Limited and Ensat Broadcast Services, Inc., both divisions of Cygnal Technologies Corporation (CYN: TSX).
Martin served on the Board of Directors for TeraGo Inc (TGO: TSX) and on the Board of Directors for Avante Logixx Inc. (XX: TSX.V). He has served as a Member, SCC ISO-IEC JTC 1/SC-41 – Internet of Things and related technologies, ISO – International Organization for Standardization, and as a member of the NIST SP 500-325 Fog Computing Conceptual Model, National Institute of Standards and Technology. He served on the Board of Governors of the University of Ontario Institute of Technology (UOIT) [now Ontario Tech University] and on the Board of Advisers of five different Colleges in Ontario – Centennial College, Humber College, George Brown College, Durham College, Ryerson Polytechnic University [now Toronto Metropolitan University]. For 16 years he served on the Board of the Society of Motion Picture and Television Engineers (SMPTE), Toronto Section.
He holds three master’s degrees – in business (MBA), communication (MA), and education (MEd). As well, he has three undergraduate diplomas and seven major certifications in business, computer programming, internetworking, project management, media, photography, and communication technology. He has completed over 80 next generation MOOC (Massive Open Online Courses) [aka Micro Learning] continuous education programs in a wide variety of topics, including: Economics, Python Programming, Internet of Things, Cloud, Artificial Intelligence and Cognitive systems, Blockchain, Agile, Power BI, Big Data, Design Thinking, Security, Indigenous Canada awareness, and more.
Martin in a volunteer, a photographer, a learner, a technologist, a philosophizer, and a romantic optimist.