NERC Issues Heightened Alert Over Data Center Loads on U.S. Power System

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Written by John Egan for IIR News Intelligence (Sugar Land, Texas)

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Summary

Large computational electric loads from data centers and other facilities could pose a threat to the reliability of the U.S. bulk power system, warns the North American Electric Reliability Corporation (NERC).

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Computational Loads: When is Too Much of a Good Thing Bad?

The North American Electric Reliability Corporation (NERC) on Monday issued a rare Level 3 Alert to the domestic Electric Power industry, with seven steps it must implement to safeguard electric reliability.

According to Industrial Info Resources data, developers plan to start construction on 2,883 data centers valued at approximately $2.43 trillion over the 2026-2030 period. According to Industrial Info Resources data, developers plan to start construction on 2,883 data centers valued at approximately $2.43 trillion over the 2026-2030 period. Subscribers to Industrial Info's Global Market Intelligence (GMI) Industrial Manufacturing Project Database can view a list of detailed project reports. For additional background, see May 6, 2026, article - Actual, Planned Capital Investments in U.S. Data Centers Soar.

Industrial Info Resources does not believe all planned U.S. data centers will be constructed on schedule. But the industry is in a "gold rush" phase to site facilities that will play a critical role in a future economy where artificial intelligence (AI) plays an ever-larger role in companies, government agencies and individuals.

Those projected loads, which far outstrip anything the U.S. Power Industry has ever confronted, are a two-faced challenge: The sharp increase in electric demand when the facilities go live, and then the potential sharp, near-instantaneous decrease in electric demand if those centers were to abruptly downshift and run at less than 100% of capacity.

"It's rare that NERC will issue a Level 3 Alert," commented Britt Burt, senior vice president for research in the Electric Power industry for Industrial Info Resources. "We should consider it a flashing yellow light--signs of potential danger ahead. If the agency responsible for ensuring the electric grid remains reliable is concerned about how computational loads could affect the reliability of the electric grid, we all should share that concern."

By the Numbers

• $47 billion: The amount of capital investment in U.S. data centers in the first quarter of 2026.
• $2.4 trillion: The amount of planned capital investment in U.S. data centers between 2026 and 2030.
• Seven: The number of "essential actions" issued by the nation's reliability manager to ensure the impact of planned large computational loads will not degrade the reliability of the U.S. bulk power system.

The Interconnected Grid: Strength and Vulnerability

The U.S. bulk power system is a series of interconnected wholesale electric markets, each of which must balance supply and demand in its footprint in real time. The inability to store electricity at scale could lead to cascading negative reliability events across markets. For example, if several hyperscalers, each with electric demand of 100 megawatts (MW) or more, unexpectedly tripped offline in Northern Virginia, that could threaten reliability across the PJM market, which provides electricity to about 67 million people in all or parts of 13 states and the District of Columbia. In turn, any wholesale market connected to PJM, such as MISO (Midcontinent Independent System Operator) or NYISO (the New York Independent System Operator) could experience negative cascading impacts if there were problems in PJM.

Last September, NERC issued a Level 2 Alert. That alert "discussed the recommended practices that NERC deemed necessary to address the emerging risks from large loads."

The responses NERC received to that alert caused the agency on Monday to issue its highest level of concern, suggesting serious shortfalls exist to meet and manage the impact of large computational loads on the nation's bulk power system.

"The purpose of this Level 3 NERC Alert is to ensure essential actions are taken by registered entities to address the risks posed by existing and new computational loads interacting with the bulk power system (Bulk Power System), inclusive of computational load interconnecting with collocated generation," NERC said.

The agency continued, "In the responses provided to the (Level 2) Alert, NERC found that entities generally did not have sufficient processes, procedures or methods to address risks associated with computational loads. This contrasts with the robust historical experience with traditional non-power electronic non-computational load. As seen in the public report, NERC found specific deficiencies with the treatment of computational loads. Examples of this load include artificial intelligence training, cryptocurrency mining, and traditional data center uses."

NERC said it set out "a set of immediate actions that registered entities should take to reduce the risk to the BPS that warrant issuance of this Level 3 Alert. These actions relate to the modeling, study, installed fault recording or instrumentation, commissioning, operation, protection, and control of computational load."

Seven Essential Actions Urged

NERC set out seven "essential actions" it wants affected entities to "consider," and report back to the agency by August. The agency said its alert and the "essential actions" did not "create a mandatory obligation to take the Essential Actions."

Here are some of the seven essential actions contained in the NERC alert:

• Transmission providers and planning coordinators should develop a detailed list of modeling data, settings, and parameters needed from computational loads and distribute this to transmission owners in their footprint. Transmission owners should reflect this in their facility interconnection requirements. This action has several sub-parts.
• Transmission providers and planning coordinators should study their system with additional considerations for computational loads under at least three specific scenarios.
• Transmission owners should establish a commissioning process for computational loads. This, too, has several parts.
• Affected parties should create processes to ensure that communication and testing coordination capabilities are coordinated between the transmission owners, transmission operators, balancing authorities, reliability coordinators, transmission planners and computational load customers.
• Transmission operators should install and utilize dynamic fault recording devices to capture and share computational load facility electrical performance during system disturbances.
• Transmission operators, reliability coordinators and balancing authorities should establish interpersonal communication capabilities with computational loads to improve their situational awareness and joint operating procedures to ensure the reliable operation of the bulk power system during planned and emergency conditions.

Key Takeaways

• Large computational electric loads could pose a threat to the reliability of the U.S. bulk power system.
• The inability of the bulk power system to store electricity at scale could lead to cascading negative reliability events across markets.
• Big Tech is in a "gold rush" phase to site facilities that will play a critical role in a future economy where artificial intelligence (AI) plays an ever-larger role.

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About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).