The new grid defection: breaking down the large load co-location fight at FERC

As data centres and other large loads struggle to secure increasingly scarce utility capacity, co-location with power plants has become a fixation of the power sector. Co-location offers the promise of simpler and faster interconnection, with little to no new investment required on the part of the incumbent utility, and a dedicated power supply. 

Independent power producers have aggressively pursued this model, seeing opportunity for long-term power offtake at scale—and with favourable pricing terms. Electric utilities, many still reeling from the scale of inbound large load connection requests, would, on the surface, benefit from the co-location model. It allows them to accommodate large load growth with minimal upfront effort and minimal long-term impact to their transmission system. This is often under the backdrop of pressure from state or local politicians, eager for the tax revenue or jobs generated by these projects. 

Despite the appearance of rising all boats, co-location has driven a wedge between the generation and wires side of the industry. The issue isn’t co-location itself, but whether the large load customer, which does not draw power from the grid, is responsible for paying for the grid as other customers do. This question has underpinned key US regulatory developments over the last year, from FERC’s (Federal Energy Regulatory Commission) rejection of Talen’s interconnection request for its Susquehanna nuclear plant to the Commission’s more recent rejection of Exelon’s transmission rate schedule.    

Our new report ‘The new grid defection: Breaking down the large load co-location fight at FERC’ clarifies these developments and the state of the debate at FERC. It also highlights state regulatory hurdles on the horizon, which may spell trouble for the kind of energy parks envisioned by Google and Intersect Power. Fill out the form at the top of the page to download the full report. 

You can also learn more about our data centre map layers and upcoming data centre features in Lens Power & Renewables Americas.