The PJM Interconnection’s proposed framework for colocating generation with large loads was panned by multiple stakeholders, including a trade group for data centers, independent power producers and the grid operator’s market monitor, according to comments filed at the Federal Energy Regulatory Commission.
“These proposals will not enable commercially viable arrangements,” the Data Center Coalition said in a filing Wednesday.
“Instead, the proposals introduce significant operational rigidity, limit flexibility, and create disincentives that will impede the development of co-located load and associated generation,” DCC said.
Independent power producer Vistra told FERC the proposals would create “long delays, unreasonable rates, and undue discrimination.”
The proposals are “unlikely to achieve the Commission's objectives,” Advanced Energy United and the Solar Energy Industries Association said in a joint filing.
Monitoring Analytics, PJM’s independent market monitor, warned that certain types of transmission service in the grid operator’s Feb. 23 proposal threaten grid reliability.
The proposal from PJM, and a related one from the region’s transmission owners, were in response to FERC’s mid-December order that the grid operator develop rules for colocating data centers and other large loads at power plants. This would make it easier for data center developers to supply their own generation, potentially saving on transmission costs and easing concerns over power supply shortages, proponents say.
As part of the order, FERC directed PJM to create three transmission services for colocated load: interim nonfirm transmission, firm contract demand transmission, and nonfirm contract demand transmission.
Adding the new transmission services will require software and other changes to PJM’s systems. As a result, PJM asked FERC that the proposal take effect June 1, 2029 — too late to address rising demand, according to Vistra and Constellation Energy.
Colocation can allow large loads to get online quickly and have greater operating predictability, according to the DCC, a trade group for data center companies.
However, under PJM’s proposed interim Network Integration Transmission Service, or interim NITS, colocated load would not have primary rights to the capacity and energy from colocated generation.
Instead, that generation would be treated as part of the “network” resource pool rather than a dedicated resource for the colocated load, the DCC said, citing a March 16 presentation by PJM staff.
“Even a customer that brings sufficient co-located generation to meet its load cannot avoid curtailment risk,” DCC said. “If co-location does not provide any meaningful ability to mitigate curtailment or ensure more predictable service, it is unclear why a customer would pursue this pathway at all.”
PJM’s proposal relies heavily on curtailment as a way to ensure system reliability, but it is vague about how it would curtail power to colocated loads, according to DCC. At the same time, if a large load fails to follow a load shed order, as a penalty, it would lose its transmission service, the group said.
“Customers are being asked to comply with operational requirements that remain largely undefined, while bearing the full risk of immediate and potentially long-term loss of service for any failure — an approach that is patently unacceptable and emblematic of PJM’s broader effort to avoid implementing the Commission’s directive while shifting all compliance risk onto customers,” DCC said.
DCC said it is also concerned that PJM’s proposed Non-Firm Contract Demand Service is overly restrictive and would be a barrier to incremental and timely service.
Further, PJM’s proposal fails to offer a clear or workable pathway for customers to ramp up load over time, shift between transmission services, or align transmission service with phased project development, the trade group said.
Market monitor warns on reliability, cost sharing
In its comments on PJM’s proposal, Monitoring Analytics said FERC’s colocation order calls for major changes to transmission service in PJM, and that the non-firm CDS and interim NITS proposals “create significant reliability risks for the transmission system.”
The non-firm CDS option would allow large loads to avoid paying for their use of PJM’s transmission system, according to the market monitor.
“Non-firm CDS would effectively provide co-located generators a subsidized low cost option to use the system whenever they need backup,” Monitoring Analytics said. “All customers should share the costs of the transmission system.”
Further, the interim NITS proposal poses reliability risks, the market monitor said.
“PJM and the affected [transmission owners] would have to perform required studies to define the amount of Interim NITS that can be reliably provided,” Monitoring Analytics said. “This raises questions about which customers would be allowed to take Interim NITS if demand exceeds supply, which seems likely given the level of forecast large data center load.”
PJM — the largest U.S. grid operator — runs the grid and wholesale power markets in 13 Mid-Atlantic and Midwestern states and the District of Columbia.
