Federal regulators back Trump's plan to speed power to energy-hungry AI data centres

US Federal regulators on Thursday agreed to let large energy users connect more quickly to the nation's inefficient electric transmission system to accommodate surging demand from power-hungry artificial intelligence (AI) data centres.

Energy Secretary Chris Wright had urged the Federal Energy Regulatory Commission (FERC) to act, in an effort to help the United States better compete with China for superiority in the fast-growing AI sector. Tech companies and data centre developers have welcomed the chances for faster connections to the country's power supply.

But utilities, states and regional grid operators worried that the Republican administration's plan would remove their authority to manage the process. Clean-energy advocates want the agency to advance, rather than undermine, state-level efforts to require the use of renewable energies.

The commission's actions come as a backlash grows against data centres over fears about rising electricity prices and concerns about the massive amounts of energy and water they use, polluting communities across the country and straining water resources and the electric grid.

Unanimous vote and affordability

FERC members voted unanimously to direct six regional grid operators to ensure that AI data centres and other large power users are "able to connect to the transmission system in a timely and orderly manner".

Laura Swett, an appointee of President Donald Trump who chairs the commission, called the vote historic and said it would push the country's electricity market into the future, while also protecting ratepayers from shouldering the costs of connecting big power users to the grid.

"I know that Americans across the country are concerned about affordability, and so are we," Swett said, referring to the five-member commission.

"Many Americans are increasingly concerned about the interconnection of large [power] loads, and data centres will increase their bills in that stress," Swett said. "As chairman, I am taking extremely seriously the mission that Congress has entrusted us to ensure that rates are reasonable and that Americans pay their fair share or less."

Data centres would pay the full cost of any grid upgrades needed for their connection, under the commission order. But that order can do little to address the tightening energy supplies that are driving up electricity bills in some areas and raising warnings of blackouts as the construction of data centres outpaces the speed of new power plants coming online to serve them.

The vote comes eight months after Wright asked the independent agency to take more control over ensuring that the vast network of massive computing warehouses needed to power AI are connected quickly to high-voltage transmission lines.

The six regional grid operators under the order serve 200 million Americans, or two-thirds of FERC's jurisdiction. FERC, meanwhile, invited utilities that handle their regional transmission systems to also participate.

A search for power

Tech giants are scrambling to find enough power for their data centres and report that, in some places, it will take years to connect to the electric grid.

Besides power bottlenecks, the tech industry is running into widespread opposition from communities. Residents do not want to live next to or near a data centre, citing fears about rising electricity prices, pollution and water consumption. There have been protests over losing open space, farmland or rural character.

More than 4,000 data centres now operate in the US, according to one estimate, with an additional 3,000 planned or under construction, including some that consume more energy than a small city. Such facilities have ballooned in size to accommodate the demands of AI.

Trump has tried to deflect public concerns about AI, seeing the fast-evolving technology as crucial for the US to attract foreign investment and maintain its economic and military prowess. Trump signed an executive order this month that establishes a framework for the federal government to vet the national security risks of the most advanced AI systems for up to a month before their public release.

In December, FERC took an earlier step to help data centre operators get electricity quickly, voting to allow tech companies to effectively plug a data centre directly into a power plant.

Power demands from data centres

Companies such as xAI, Google, Microsoft, Meta, Oracle, OpenAI and Amazon have signed Trump's Ratepayer Protection Pledge, in which they agreed to build or buy new sources of power generation for their data centres and cover the expense of infrastructure upgrades.

They also committed to making backup generation available to prevent blackouts in times of emergency, and to hire locally for their data centre build out.

Rob Gramlich, a Washington-based energy consultant, said the order leaves states in control of retail electric rates, terms and conditions. But, he said, they should quickly develop rules to accommodate large power users and prevent cost shifts to residential and business customers.

FERC could assert broader jurisdiction over interconnection of large power users if states do not act quickly, Gramlich said.

Data from the Electric Power Research Institute shows that data centres now account for about 5.0 per cent of US electricity demand, but could triple by 2035. In Virginia, data centres account for more than 25 per cent of overall demand and could rise to more than 40 per cent by 2030.

Tech companies have continued to raise their spending on data centres, but there is evidence that construction is lagging.

Last month, a JP Morgan report said that, based on satellite images, over 60 per cent of data centre capacity planned for completion in 2027 hasn't begun construction, and another 7.0 per cent is delayed. It said the culprits are typically related to permitting and delays in getting gas turbines, transformers and skilled labour.

-AP