Background

behind-the-meter (BTM) generation refers to electricity generation installed at a facility that feeds power directly to on-site loads without flowing through the public electricity grid or a utility meter. For data centres, BTM has become the primary strategy for bypassing grid-connection queues that stretch to three years or more in constrained markets.

BTM data centre projects range from natural gas turbines, such as the 1.2 GW of turbines approved for xAI's Colossus in March 2026, to renewable microgrids such as Pure DC's 110 MW Dublin scheme. Meta's El Paso data centre plans a dedicated 366 MW gas plant, which still awaited Texas regulatory approval in October 2026. The aim is to supply primary power on site rather than wait in the grid-connection queue.

BTM is distinct from grid-connected backup generation: in BTM architecture, onsite capacity is the primary power source, not a fallback. Virginia passed a $0.011 per kWh consumption tax on 22 June 2026 covering both utility-supplied and self-generated BTM power, capped at $600m per year and sunsetting 1 July 2028, the first US levy to reach past the utility meter. The Department of Energy separately issued two Section 202(c) curtailment orders against BTM generation in PJM territory in 2026, confirming federal oversight of the sector is active and expanding.

Common Questions

What is behind-the-meter generation for data centres?

behind-the-meter generation means a data centre generates its own power onsite, without drawing from the utility grid. It bypasses grid-connection queues and is not subject to grid connection regulations, but requires its own generation permits.Source: Lowdown data-centres briefing

How big are behind-the-meter data centre installations?

xAI's Colossus in Memphis won approval in March 2026 for 41 gas turbines totalling 1.2 GW. Pure DC's Dublin microgrid is 110 MW. Meta's El Paso data centre plans a dedicated 366 MW gas plant that still needs Texas approval. GE Vernova's 80 GW turbine backlog is driven primarily by BTM orders.Source: Lowdown data-centres briefing

What is behind-the-meter power generation for data centres?

behind-the-meter generation is electricity produced on the customer's side of the utility meter and consumed on-site without flowing through the grid. Data centres use it to bypass interconnection queues that can stretch three years or more.

Why did Virginia pass a tax on behind-the-meter data centre power?

Virginia passed a $0.011 per kWh consumption tax on 22 June 2026 covering both utility-supplied and behind-the-meter power, capped at $600m per year and sunsetting in 2028, as part of a budget deal that preserved the existing $1.9bn sales-tax exemption.Source: Virginia General Assembly

How does behind-the-meter generation let data centres avoid the grid queue?

By generating all primary power on-site, a data centre never applies for a grid interconnection offer, bypassing queues that in some US markets stretch to 2027 or beyond. The facility still needs air-quality or generation permits, but not a utility connection study.

What did the DOE Section 202 curtailment order mean for data centres?

The Department of Energy issued two Section 202(c) emergency curtailment orders in 2026 granting PJM authority to reduce output from data centres with behind-the-meter backup generation during peak-demand events, establishing federal oversight over BTM capacity for the first time.Source: US Department of Energy

Source Material

IEA Data Centres and Data Transmission Networks

How the World Sees Them

Utilities

Large-scale BTM reduces load that utilities expected to serve, affecting their revenue forecasts. Some utilities have begun lobbying for standby charges on BTM facilities that retain grid backup.

Data centre operators

BTM removes the grid as a dependency and gives operators direct control over power supply. In constrained markets it is the only viable path to near-term capacity.

Environmental regulators

BTM gas facilities may fall through regulatory gaps between utility generation rules and backup generator exemptions, allowing emissions that would face scrutiny if grid-connected.