DOE's latest move the most direct yet to smooth data centers' path
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Let's gauge early fallout from DOE boss Chris Wright pushing FERC to quickly craft formal rules that speed data centers' connection to power grids.
Why it matters: It's Trump officials' most direct move yet to smooth the bureaucratic path for AI data centers — and power sources serving them — to come online.
Catch up quick: Wright, in a letter released Friday, urged FERC to assert jurisdiction over "large loads" that link directly to interstate transmission.
- His letter floats policy ideas for considering these new demand sources alongside new generation, as well as assigning network upgrade costs to these loads.
A few early takeaways...
A take on winners and losers. Overall, the strategy firm Capstone LLC sees the plan as bullish for nuclear plant owners interested in co-location agreements with data centers.
- It's also good news for gas turbine makers and onsite power tech players, it said in a note.
Flexibility has truly arrived. The proposal urges expedited consideration for projects that are "curtailable and dispatchable." It's new buy-in for the feasibility of data centers, in limited instances, lowering energy needs or moving compute function between facilities.
- "One of the reasons large load flexibility appears to have broad appeal is that it can be served by, and coordinated with, everything from battery storage and natural gas to biofuels, geothermal, and advanced computational resource management," power analyst Tyler Norris, who analyzes data center flexibility, tells me via email.
- But hyperscalers will be on the lookout for anything they find too prescriptive (this is playing out in PJM).
Wright's pitch seems to have wide initial buy-in, at least for now, making it a rarity in a polarized time.
- "There is broad bipartisan support for FERC taking action soon on these issues," David Rosner, a Democratic FERC commissioner, posted on X.
- Allison Clements, a former Democratic FERC member, posted that it could be "game changing."
But it's early days. Wright's letter offers only high-level principles, so the devil will be in the details.
- "Given that many of our industry sources appeared surprised by the DOE's October 23 letter, it is far from clear how asset owners, state policymakers, and customers will respond," ClearView Energy Partners said in a note.
Battles could loom. Analysts see legal fights, even though Wright's letter argues at length that the plan doesn't trample on state jurisdiction over generation and retail prices.
Watch the big, powerful utilities. Capstone predicts for-profit utilities will fight "any rules to allow large loads to self-fund or build interconnection-related network upgrades."
- That's because it could prevent inclusion of this infrastructure in their rate base.
- The Edison Electric Institute, the main trade group of for-profit utilities, issued a statement praising White House energy and AI goals. But it avoided comment on the specifics.
Watch the clock, too. Wright asked FERC to complete a final rule by April 30, 2026. That would be blazing speed.
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