NERC Tees Up Plan to Assess Grid Risks Associated with Data Centers

The North American Electric Reliability Corporation (NERC) outlined forthcoming activities to identify and address the potential impacts to reliability as a result of the rapid expansion of data centers and other large industrial loads in the US related to artificial intelligence.

Previous NERC Assessments

NERC is the not-for-profit international regulatory authority whose mission is to assure the effective and efficient reduction of risks to the reliability and security of the grid in the continental US, Canada, and the northern portion of Baja California, Mexico. NERC's jurisdiction includes users, owners, and operators of the bulk power system serving nearly 400 million people. In the 2024 Long-Term Reliability Assessment, an annual review of the reliability of the US bulk power system, NERC stated that the proliferation of emerging large loads, such as data centers, poses "unique challenges to forecasting and planning for increased demand."¹ The following excerpt from the report is illustrative in how data centers and large industrial loads may impact grid operations in the immediate- and near-term:

• "The behavior of large data centers during normal grid faults is also an emerging concern because customer-initiated automatic disconnecting of sizeable load can cause operating issues. Sudden and unexpected disconnecting load during a grid fault is analogous to well-known [inverter-based resource] performance issues and poses similar reliability risks. Planners and operators need to consider the characteristics of these loads as they begin to proliferate and support NERC [Reliability and Security Technical Committee]'s Large Loads Task Force to share best practices."²

As part of its Reliability and Security Technical Committee (RSTC), NERC established the Large Loads Task Force (LLTF) on October 8, 2024. According to NERC documents, the task force will focus first on identifying the unique technical and operating characteristics of large loads. Following its initial analysis, the LLTF will aim to evaluate how to improve existing planning and operations processes to help transmission planners and grid operators mitigate any risks to the bulk power system.

During an internal presentation launching the LLTF,³ NERC stated that some load types may reduce their consumption during voltage disturbance events, and if the loads are large enough, such behavior may lead to a "significant and unexpected frequency disturbance." Voltage disturbances are equipment-related, typically due to power line faults, capacitor switching, or other system faults, and may vary in severity and duration. The vast majority of voltage disturbances are both minor in severity and short-lived so as to not present a risk to grid reliability.

In particular, ERCOT — the grid operator in Texas — has observed that several "new types" of loads (i.e., data centers and cryptocurrency mining) are vulnerable to voltage disturbances. Cryptocurrency mining in ERCOT has resulted in 25 load loss events since November of 2023, with a range of 100 MW to 400 MW for each disturbance.

NERC also pointed to two voltage-sensitive load loss events at the Eastern Interconnection, which affected grid operations in Virginia (the state boasting the most data centers in the US). In July of 2024, 1,500 MW of load exclusively associated with a data center was lost across 60 different points and 25 substations due to a 230 kV transmission line fault. NERC stated that this voltage-sensitive load disturbance had not been anticipated by power system operators and, consequently, the voltage rose beyond normal operating levels. Ultimately, NERC found that the voltage did not rise significantly enough to impact bulk power system reliability, but that in the future, operators and planners "should be aware of this reliability risk" and ensure that similar load loss events "do not reach intolerable levels."

According to the LLTF presentation, however, there may be a technical balance to strike, as "historically some load reduction/tripping during a fault/low voltage has been good for the [bulk power] system." Nonetheless, the presentation highlighted that the proportion of new large loads sensitive to voltage disturbances may in fact reduce the strength of the system overall and, as a knock-on effect, increase the risk of large amounts of load loss during such disturbances.

The task force outlined two potential approaches to mitigate voltage disturbances, although neither should be interpreted (as of yet) as being operationally and technically feasible and/or endorsed by NERC: 1) establish a voltage ride-through standard in a manner similar to requirements for inverter-based resources; 2) limit load tripping via grid planning by reducing the amount of load exposed to disturbances. Both approaches would likely require additional information and analysis, including better dynamic modeling of large loads, supporting the notion that NERC will continue to engage with data center developers and operators.

Related Proceedings at FERC

On February 20, 2025, the Federal Energy Regulatory Commission (FERC) issued a Show Cause order,⁴ pursuant to Section 206 of the Federal Power Act (FPA), combining the records of a formal complaint initiated by an electric utility and a Technical Conference convened by FERC relating to co-located load (i.e., pairing on-site generation facilities with data centers). In the Show Cause order, FERC sought to evaluate a number of issues raised in the consolidated proceedings and sets forth certain questions, including on reliability. For a more detailed overview of the Show Cause order, and earlier proceedings, please refer to our client alert on the subject (FERC Orders Review of Co-Located Generation for Data Centers in PJM).

Specifically, FERC cited a concern with overall grid reliability, as well as resource adequacy, in the development of more behind-the-meter large loads associated with data centers. In previous comments, NERC raised the prospect of voltage drops that may adversely affect grid operations in the circumstance where a co-located load would momentarily disconnect from the bulk power system. Similarly, PJM Interconnection, L.L.C. (PJM) — the mid-Atlantic grid operator with oversight over a majority of data centers in the US — stated that "co-located loads that are not Network Loads are not holistically planned for."⁵ To that end, FERC highlighted the lack of "rules necessary [in the PJM Tariff] to provide PJM with sufficient information" to conduct analyses for reliable system operations.

However, FERC conceded that co-located loads do not represent the only concerns associated with load growth and that resource adequacy issues writ large do not apply exclusively to data center proliferation. The Show Cause order also asked for potential provisions to incorporate into the PJM Tariff that might ensure co-located load is visible to the grid operator so as to avoid unintended, or perhaps unknown, bulk power system impacts.

In the ensuing weeks following the issuance of the Show Cause order, many stakeholders and interested parties filed comments (including but not limited to elected officials, public utilities, energy developers, and advocacy groups). PJM submitted an answer on March 24, 2025, stating that since 2024, it has been also "collecting more granular data using the NERC Data Center Load Information Survey template to evaluate the impact of large data center co-located load ramping behaviors."⁶

Upcoming NERC Activities

Based on the initial LLTF presentation, NERC is presently engaging with data center developers and operators with respect to prior instances of load loss in order to determine what may have occurred. Most recently, at the April 17, 2025 Commission Open Meeting, FERC initiated a new docket whereby NERC will investigate load loss events associated with large loads and data centers.⁷ Further, the LLTF is engaging in Advanced System and Analytics Modeling studies to better identify risks going forward.

The NERC regional entity for the Western Interconnection, the Western Electricity Coordinating Council (WECC), separately established a Large Load Risk Assessment project under the NERC Industry Advisory Group. In a report released in February of 2025, WECC stated as follows:

• "Ideally, large loads should be designed and operated in alignment with the performance obligations of the BPS. Furthermore, given the size of large load interconnection requests and the effects they can have on the BPS individually and in aggregate, it is important for large loads to meet BPS performance requirements including disturbance ride-through. Significant loss of load can cause instability, uncontrolled separation, and cascading."⁸

NERC has laid out a multi-step plan for the year, culminating in the release of two white papers, with the goal of proposing a reliability guideline in the first quarter of 2026. The first white paper, expected in the second quarter of 2025, will examine the characteristics and risks of emerging large loads; the second white paper, expected in the third quarter of 2025, will assess the gaps in existing practices, requirements, and NERC Reliability Standards for emerging large loads.

For the first white paper, NERC indicated that it will prioritize risks in three tiers: High, Medium, and Low.

In addition to the technical analyses ahead, NERC intends to evaluate if there is a legal basis for large loads to register as users of the bulk power system. If so, this would entail data centers being required to become Registered Entities (i.e., subject to direct oversight by NERC for compliance with its Reliability Standards). In the same vein, NERC also signaled it may investigate the need to create new Reliability Standards, or modify existing ones, in order to sufficiently identify and manage risk to the grid.

Over the course of the coming months, stakeholders will have a number of opportunities to engage with FERC, PJM, NERC and the other governmental and quasi-governmental entities who regulate data centers and other large loads.

_{1 2024 Long-Term Reliability Assessment, North American Electric Reliability Corporation (December 2024). Available at: https://www.nerc.com/pa/RAPA/ra/Reliability%20Assessments%20DL/NERC_Long%20Term%20Reliability%20Assessment_2024.pdf.
2 Id. at 38.
3 Welcome to the Large Loads Task Force (LLTF) Kickoff Meeting, North American Electric Reliability Corporation (October 8, 2024). Available at: https://www.nerc.com/comm/RSTC/LLTF/LLTF_Kickoff_Presentations.pdf. 
4 190 FERC ¶ 61,115, Federal Energy Regulatory Commission (February 20, 2025).
5 Id. at 45.
6 Answer of PJM Interconnection, L.L.C., Docket Nos. EL25-49-000, AD24-11-000, EL25-20-000 (March 24, 2025).
7 Docket No. AD25-10, Federal Energy Regulatory Commission eLibrary. Available at: https://elibrary.ferc.gov/eLibrary/docketsheet?docket_number=ad25-10&subdocket=all. 
8 An Assessment of Large Load Interconnection Risks in the Western Interconnection: Technical Report, Western Electricity Coordinating Council (February 2025). Available at: https://www.wecc.org/sites/default/files/documents/products/2025/Report_WECC%20Large%20Loads%20Risk%20Assessment%204.pdf.}

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