Pennsylvania Requires Data Centers Over 25 MW to Secure Their Own Generation

Pennsylvania Governor Josh Shapiro signed an order on August 18 requiring data centers over 25 MW to secure their own generation or face curtailments during grid emergencies. According to Canary Media, facilities seeking expedited permits must meet a clean energy floor rising from 10% in 2027 to 32% in 2035.

The order mirrors the framework that PJM Interconnection, the grid operator covering 13 states, submitted in July to the U.S. Federal Energy Regulatory Commission (FERC). According to Utility Dive, that proposal gives utilities the discretion to determine which data centers are curtailed during demand peaks, unless those facilities pay for their own capacity through gas, batteries, solar, wind, or demand response programs. Shapiro thereby formalizes in Pennsylvania the voluntary norms he proposed in February. For the region, the fundamental question is who absorbs the cost of the grid infrastructure that AI demand requires, the same market design dilemma facing CFE and CENACE in Mexico as that load grows.

Data centers concentrated $29.4 billion, 46% of capacity charges, across PJM's last four auctions, according to the Independent Market Monitor. The order also directs the PUC to charge data centers, not other ratepayers, the costs of the backup auction that PJM plans to cover a 6.8 GW deficit. PUC Chairman Stephen DeFrank endorsed the plan, arguing that Pennsylvania residents should not subsidize infrastructure for some of the world's largest energy consumers. The Data Center Coalition asked that the rules not be changed mid-course. Pennsylvania has accumulated more than 3 GW of projects with interconnection rights, primarily solar, wind, and batteries, according to RMI.

The next steps lie with the Public Utility Commission, which must convert the order into enforceable rules, and with the backup auction PJM plans for the fall. Other states within PJM territory, including Illinois, Indiana, Ohio, and Virginia, are pursuing the same approach of charging data centers their grid costs.

This article was written with artificial intelligence assistance based on verified sources and reviewed by a human editor before publication.