Energy regulators and lawmakers across the United States are moving toward new policies that could allow data centers and other massive electricity users to be cut off during periods of grid emergency. As demand from cloud computing, artificial intelligence (AI), and crypto mining surges, the pressure on power systems is growing. These changes could reshape how digital infrastructure operates—and how electricity reliability is managed.
Texas Leads With Senate Bill 6
In Texas, a new law known as Senate Bill 6 (SB 6), signed by Governor Greg Abbott, gives the Electric Reliability Council of Texas (ERCOT) the authority to force large power users—such as data centers, crypto mines, or industrial plants—to shut down or switch to backup power when grid emergencies occur. (Utility Dive)
Here are some of the key parts of the law:
- It targets operations using at least 75 megawatts (MW) of power. That is a lot—enough to power tens of thousands of homes. (Chron)
- Such large loads must be “curtailment-ready” if they want to connect to the Texas grid after a certain date. That means having equipment and plans in place to either reduce demand or switch to on-site generation when asked. (Utility Dive)
- Utilities in Texas will also run voluntary demand response programs, giving large customers incentives to reduce load when the grid is stressed. (Utility Dive)
- Existing facilities may have some exemptions or delayed obligations depending on prior commitments, but new projects will face tighter standards. (Chron)
ERCOT projects that by 2030, Texas may see over 138 gigawatts (GW) of large-load demand connected—up from about 87 GW now. That increase intensifies concern about whether the grid can handle all of that. (Utility Dive)
PJM Region Faces a Growing Load Crisis
In the Mid-Atlantic, the PJM Interconnection grid is under similar pressure. Data center growth there has been rapid. Analysts believe this boom could drive up both peak electricity demand and operating costs. (New Energy Report Com)
A few sharp data points:
- A modeling study by Synapse Energy Economics forecasts that, by 2040, PJM annual energy usage from data centers could rise from about 50 terawatt-hours (TWh) in 2023 to approximately 350 TWh. That would shift the share of total load from roughly 6% to nearly 24%. (Synapse Energy)
- Without action, residential rates in the PJM region could climb by 10% in the near term, with further increases likely. (Synapse Energy)
- To meet the demand induced by this growth, PJM would need massive investments in transmission, more gas capacity, and new renewable generation. Otherwise, reliability concerns may escalate. (Synapse Energy)
One incident highlights the risk: in July 2024, around 60 data centers in “Data Center Alley” outside Fairfax, Virginia disconnected automatically due to a failed surge protector. They switched to backup generators. That triggered an imbalanced load—electricity supply suddenly far exceeded demand—and forced power plants to scale back output. The grid operators, including PJM and Dominion Energy, responded quickly to prevent cascading failures. (Reuters)
Regulators are now considering requiring more reliability standards. Chief among them is mandates that data centers tolerate voltage fluctuations (“ride-through”) rather than disconnecting at the first sign of instability. These proposals are controversial due to risks of damage to sensitive equipment. (Reuters)
Why This Is Emerging Now
Several trends have converged to create this moment:
- Rapid Expansion of Data Centers
The rise of AI, large-language models, cloud computing, streaming—all require data centers. New facilities are being built faster than many grid expansions. (Utility Dive) - Retiring Generation and Capacity Constraints
Older plants—especially fossil fuel ones—are being shut down faster than replacements often arrive. During peak seasons (summer heat, winter cold), the margin between available power and needed power shrinks. (New Energy Report Com) - Delays in Interconnection and Transmission Build-out
New renewables, gas plants, grid lines—all take time. Permitting, regulatory review, siting: these slow down how fast new supply can reach demand zones. (Reuters) - Regulatory Awareness and Political Pressure
Blackouts, price spikes, public dissatisfaction are pushing lawmakers to act. Texas’ memory of the deadly 2021 winter storm is one driver. Stakeholders are now less willing to defer responsibility. (The Washington Post)
What Must Be Done: Specific Actions
Here are steps that grid operators, state regulators, data center firms, and industry groups should consider. These are actionable; some are underway, others remain in planning.
| Action | Who Needs to Do It | Why It Matters |
|---|---|---|
| Implement mandatory curtailment plans | State legislatures / utility regulators | Ensures that during emergencies, large loads can be reduced in a controlled way. Texas SB 6 is a leading example. (Utility Dive) |
| Require backup or on-site generation for large users | Data center developers / utility interconnection rules | Allows data centers to shift off the main grid during stress, reducing risk. Also improves resilience. |
| Adopt ride-through standards | Regulators / reliability entities (e.g., NERC, state PUCs) | Prevents automatic cut-offs during minor grid fluctuations. Helps avoid cascading problems. |
| Model future demand scenarios including data center growth | Grid operators like PJM, ERCOT; independent analysts | Forecasts help plan generation, transmission, storage. Synapse modeling shows big rises in load, bills unless managed. (Synapse Energy) |
| Incentivize demand response programs | Utilities, regulators, large customers | Financial incentives for voluntary shutdowns or load shifting soften the blow of mandatory curtailment. |
| Speed up interconnection and permitting | State and federal regulators | Delays cost money. Slower interconnection means risk increases. Google-PJM AI tools are one effort in this direction. (Reuters) |
| Define grid emergencies clearly | Regulatory bodies | Clarity about what triggers shut-offs helps data centers plan better and raises legitimacy of rules. |
Risks, Trade-Offs, and Objections
These new rules are not without controversy. Some major concerns:
- Damage to Equipment: Data center operators warn that voltage disturbances or forced switching could damage servers, data loss, or shortened lifetimes. Ride-through requirements are especially problematic for sensitive components. (EnergyNow)
- Investor Uncertainty: If reliability of power supply is made conditional or uncertain, some companies might choose other jurisdictions, slowing investment in states with stricter rules. (The Washington Post)
- Cost Burdens: Building backup systems or meeting curtailment readiness can be expensive. Some costs may be passed on to end consumers unless carefully managed. (Utility Dive)
- Equity Concerns: If data centers are exempt or partially exempt, or if only new ones are regulated, older ones may still strain the grid. Meanwhile, residential customers or services deemed critical may still face outages. Ensuring fairness is crucial.
What Readers Should Watch Next
For professionals in energy, infrastructure, technology, or policy, the coming months will be critical. These are developments to monitor:
- Final rules from state public utility commissions in Texas, PJM states, and other regions. How exactly will mandatory curtailment work? What notice periods? What penalties?
- Decisions by data centers on backup power investments. Firms that build robust on-site generation or storage may fare better under stricter grid-reliability regimes.
- Responses from industry coalitions. The Data Center Coalition in Texas and similar groups elsewhere have influence. Their feedback can shape regulations, exemptions, and compensation mechanisms.
- Cost and rate impacts on residential customers. Will new rules increase bills? Will rate classes be rebalanced so that large energy users bear more of the costs of reliability?
- Emerging legal challenges. Questions about regulatory authority, interstate competition, or whether these policies violate contracts may arise.
Conclusion
The United States stands at a crossroads. Big Tech’s demand for power, driven by AI, cloud storage, and computing, is surging. Electric grids are stretched. The cost of doing nothing may include blackouts, rising bills, and faltering reliability. On the other hand, strict policies, well thought out, can ensure both innovation and stability.
Texas’ approach with Senate Bill 6 already lays down a path. PJM and other regions are studying what to do. For those working in energy, tech, or policy: now is the time to prepare. Speak up, plan ahead, and build for resilience. The choices made today will power—or disable—tomorrow’s digital world.
