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Data Centres: Boom and Backlash
26MAY

DOE lets PJM switch off data centres

4 min read
11:34UTC

The US Department of Energy gave grid operator PJM authority on 18 May to curtail data centres running their own backup generation, its second such emergency order in 2026, as a heat event with 40 GW of plant offline pushed the 14-state grid toward rolling blackouts.

IndustryDeveloping
Key takeaway

Behind-the-meter generation, built to escape grid rules, has been reclassified as the grid's interruptible reserve.

For three days from 18 May the US Department of Energy (DOE) gave grid operator PJM Interconnection, which runs the 14-state mid-Atlantic and midwest network, authority to curtail data centres equipped with their own backup generation. PJM activated it during a heat event with more than 40 GW of plant out for maintenance and a peak-load forecast of 135,961 MW, with Maryland and Virginia under the most strain. 1 The DOE called it the second such emergency order in 2026.

The instrument is Section 202(c), the Federal Power Act emergency power that lets the energy secretary order generation or curtailment to keep the lights on. Its target marks the shift. Operators spent the past year building behind-the-meter (BTM) generation, private gas turbines and engines sited inside the campus fence, to escape the grid-connection queue and congestion pricing. xAI won approval for 41 turbines at Colossus and Meta commissioned a 366 MW BTM gas array at El Paso for that reason . GE Vernova's 80 GW turbine backlog and the IEA's 15-27 GW US onsite-gas projection had made that load class visible enough for regulators to name it . The first concrete federal action treats the fleet as the grid's shock-absorber, the load to drop first.

That runs against what the industry was lobbying for. PJM was due to file its revised co-located load tariff on the same 18 May date , seeking recognition for generation so operators could sit behind it and avoid curtailment. The emergency order arrived first and ran the opposite way: BTM capacity as interruptible reserve, not as a shield.

Operators argue this is weather, not a rulebook, and they are partly right: 202(c) is an emergency tool and the permanent rule is still pending. Then count the orders. DOE has reached for this power twice in five months, naming the BTM-equipped load class specifically, which reads as a disposition rather than an accident.

Deep Analysis

In plain English

Data centres have been quietly building their own power plants, typically gas turbines inside the campus fence, to avoid waiting years for a grid connection. They called this going "behind the meter" (BTM), meaning on their side of the utility's measurement point. When a heat wave hit in May, the US Department of Energy (DOE) used a rarely-invoked law called Section 202(c) of the Federal Power Act to give PJM, the company that runs the electricity grid across 14 states, the authority to switch those private data-centre generators off first during a crisis. The paradox: the generation operators built to be independent from the grid became the grid's emergency shock-absorber. PJM manages power for 65 million people from Illinois to the Atlantic coast and was running low on spare capacity during the heat event.

Deep Analysis
Root Causes

PJM's forward capacity auction cleared at roughly eight times the prior year's cost in 2026 and, for the first time in the grid's history, could not procure 100 per cent of its required capacity reserve. The structural driver: PJM peak demand was effectively flat from 2005 to 2020; data-centre load growth of approximately 5 per cent annually since 2021 has compressed a decade of planning margin into five years.

The BTM legal definition under FERC rules sat at 20 MW as the threshold above which co-located load must interconnect to the grid like any other large load. FERC's April 2026 rejection of PJM's bid to redefine that threshold left a gap: operators above 20 MW with BTM generation sat in a legal grey zone the emergency order exploited before the permanent rule closed it.

What could happen next?
  • Precedent

    Two Section 202(c) orders in five months naming the same BTM load class establish a regulatory posture that the end-June RM26-4-000 rule will either confirm or contradict.

    Short term · Assessed
  • Risk

    Operators with 100-400 MW of BTM gas now face the possibility that capital spent to escape the grid queue can be conscripted as interruptible reserve during summer peak without compensation.

    Immediate · Assessed
  • Opportunity

    Non-gas firm power procurement (solar-plus-storage, geothermal, nuclear) gains a regulatory-risk-reduction premium that changes the economics of renewable PPAs for hyperscalers.

    Medium term · Assessed
First Reported In

Update #4 · Grid wins power to switch off data centres

Utility Dive· 26 May 2026
Read original
Causes and effects
This Event
DOE lets PJM switch off data centres
The order inverts the industry's behind-the-meter strategy: operators built private gas generation to escape the grid queue, and the first concrete federal action treats that same fleet as the grid's first curtailment target.
Different Perspectives
EdgeConneX in Italy (EU market)
EdgeConneX in Italy (EU market)
EdgeConneX committed €3bn to Italian data-centre capacity starting in 2026, routing capital to a jurisdiction where AI Act and NIS2 mandates create structural demand for EU-resident compute and the government actively attracts investment; Virginia's fiscal standoff and US moratoriums are redirecting pipeline offshore.
Enbridge and Baker Hughes (firmed-power and oilfield-services suppliers)
Enbridge and Baker Hughes (firmed-power and oilfield-services suppliers)
Enbridge committed $1.2bn to Wyoming solar-plus-storage for Meta and Baker Hughes redirected oilfield drilling capacity into enhanced geothermal in New Mexico; both companies are routing capital away from fossil infrastructure into data-centre power procurement at precisely the moment BTM gas became a federal curtailment target.
US federal regulators (DOE and FERC)
US federal regulators (DOE and FERC)
DOE reached for Section 202(c) twice in five months naming the same BTM load class, while FERC rejected PJM's bid to redefine the 20 MW co-located load threshold in April; together they have treated private data-centre generation as a dispatchable grid resource before the permanent RM26-4-000 rule settling its legal status has been written.
European energy regulators and climate advocates
European energy regulators and climate advocates
GE Vernova's 100 GW gas-turbine backlog, driven by AI data-centre demand, puts IEA net-zero pathways under pressure: 15-27 GW of onsite gas is forecast for US data centres by 2030. The Amazon Boardman $20.5m pollution settlement gives environmental litigation a financial template it previously lacked.
Irish Commission for Regulation of Utilities (CRU)
Irish Commission for Regulation of Utilities (CRU)
The CRU-compliant Pure DC behind-the-meter template gives operators a replicable European consent pathway outside the UK queue. Ireland's existing hyperscaler density and the CRU framework's behind-the-meter provisions make it the lowest-friction large-load jurisdiction in Europe for 2026 approvals.
Nordic operators (Equinix-CPP-atNorth, Aikido Technologies)
Nordic operators (Equinix-CPP-atNorth, Aikido Technologies)
Equinix's CPP-atNorth acquisition and Aikido's AO60DC floating-wind pilot at METCentre Norway offer hyperscalers a consented, low-carbon supply chain that bypasses both US moratorium risk and European grid queues. Norway's renewable surplus and Fingrid connection windows make the Nordic corridor the clearest alternative supply chain in the current environment.