FERC Orders Faster Grid Connections for AI Data Centers Amid Surging Energy Demand

On Thursday, U.S. federal regulators issued a new mandate requiring regional grid operators to speed up interconnection access for large energy consumers to the country’s outdated, overstretched electric transmission network. The move is explicitly framed as a response to skyrocketing electricity demand from energy-intensive artificial intelligence data centers, which regulators say has outpaced the current system’s ability to accommodate new loads.

U.S. Energy Secretary Chris Wright had previously pressed the Federal Energy Regulatory Commission (FERC) to take action, framing the change as critical to helping the U.S. outcompete China for global leadership in the fast-expanding AI sector.

Tech firms and data center developers have welcomed the rule, which cuts red tape for connecting what are among the largest energy consumers ever built in the U.S. Some major AI-focused data centers consume more electricity than entire small municipalities.

Utilities, state governments, and regional grid operators had raised concerns that the Republican administration’s proposal would strip them of authority over the interconnection process. FERC, however, emphasized that the new order leaves state governments in full control of retail electricity rates, as well as all service terms and conditions. Clean energy advocates have also warned regulators against undercutting existing state-level policies that mandate renewable energy adoption for new large developments.

Thursday’s vote comes amid growing public pushback against data center development nationwide, driven by widespread concerns over the facilities’ massive energy and water consumption, alongside risks of noise and air pollution, local water shortages, and the loss of open space and farmland.

FERC members voted unanimously to direct six regional grid operators to guarantee that AI data centers and other large power users are “able to connect to the transmission system in a timely and orderly manner.” Laura Swett, a Donald Trump appointee who chairs the commission, called the vote “historic,” arguing it will modernize the nation’s electricity market for the future while upholding states’ rights, protecting grid reliability, and preventing everyday utility ratepayers from being stuck footing the bill for connecting big users to the network.

“I know that Americans across the country are worried about affordable energy, and we share that concern,” Swett said, speaking on behalf of the five-member commission. “As chair, I take extremely seriously Congress’s mandate that we ensure rates remain reasonable.”

Thursday’s vote comes eight months after Wright asked the independent agency to take greater oversight to speed up connections between the massive AI-powered computing facilities and the country’s high-voltage transmission lines. Wright praised FERC’s decision, saying it “removes barriers, accelerates development, and ensures America has the affordable, reliable and secure energy needed to power a new era of prosperity.”

Under the FERC order, data centers are required to cover the full cost of any grid upgrades needed for their interconnection. Even so, the rule does little to address tightening energy supplies that have already pushed up electricity costs in some regions and raised warnings of potential blackouts, as data center construction continues to outpace the buildout of new power generation capacity needed to serve them.

Robert Montejo, an attorney who represents data center clients, said the clearest message from FERC’s action is that AI has fundamentally reshaped the U.S. energy landscape. “The grid and prior policy were not built for the pace and scale of demand we’re seeing from AI infrastructure, and FERC is signaling that standing still is no longer an option,” he said.

The six regional grid operators covered by the mandate serve 200 million Americans, roughly two-thirds of the population within FERC’s jurisdiction. FERC also opened participation to utilities that manage their own regional transmission systems, and analysts note the agency could eventually pressure those utilities to adopt the same rules too.

Big tech firms have been scrambling to secure enough power for their expanding data center portfolios, and report that interconnection timelines in some regions stretch out to multiple years. The Edison Electric Institute, a trade group representing investor-owned utilities, said FERC’s order builds on ongoing regional and state processes while “supporting flexibility and innovation.”

Beyond grid bottlenecks, the tech industry is facing widespread local opposition from communities that do not want data centers sited near residential areas. Current estimates put the number of operating U.S. data centers at more than 4,000, with another 3,000 planned or under construction.

Trump has sought to defuse public concerns around AI development, framing the fast-evolving technology as critical to attracting foreign investment and maintaining U.S. economic and military dominance. Earlier this month, he signed an executive order establishing a framework for the federal government to vet the national security risks of the most advanced AI systems for up to 30 days before their public release.

This is not FERC’s first move to speed up power access for data centers. In December, the commission voted to allow tech companies to connect data centers directly to standalone power plants, and Thursday’s order works to make that connection option accessible nationwide.

FERC has given grid operators 30 days to outline how they will ensure adequate energy supplies for existing and future data centers, and 60 days to submit plans to integrate large power users in line with the new guidelines. After Thursday’s meeting, Swett told reporters she hoped faster interconnection processes would take effect “as little time as possible,” though she declined to set a firm timeline.

Jeff Dennis, executive director of the Electricity Customer Alliance, said FERC’s order addresses key concerns from both large energy users and state regulators. He noted big tech firms currently face inconsistent, unclear rules for connecting data centers to high-voltage transmission, while states need more clarity around who pays for regional transmission projects approved at the federal level.

Rob Gramlich, a Washington-based energy consultant, said states should move quickly to draft their own rules to accommodate large energy users and prevent connection costs from being shifted to residential and small business customers. If states delay, Gramlich said FERC could ultimately assert broader regulatory authority over interconnection issues.

Data from the Electric Power Research Institute shows data centers currently account for roughly 5% of total U.S. electricity demand, and that share could triple by 2035. While tech companies have ramped up spending on new data center construction and outfitting, many projects have hit delays, held up by permitting backlogs, growing local opposition, supply chain bottlenecks for key components like gas turbines and transformers, and widespread shortages of skilled labor.

Reporting by Matthew Daly and Marc Levy, Associated Press

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