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(Bloomberg) -- The largest US grid is set to speed the review process for new power plants, in a move that supports gas in the race to feed a surge in demand from data centers amid the AI boom.
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PJM Interconnection LLC, which manages a network from the East Coast to Chicago, won federal approval to fast-track the review of up to 50 new projects. The studies will focus on boosting grid reliability starting in April to help avoid potential shortages toward the end of this decade, the Federal Energy Regulatory Commission said in an order issued late Tuesday.
“It’s really important that the state and federal government expedite the process for building new power generation given the demand growth that we are anticipating,” said Morningstar analyst Travis Miller. “We think the eastern US is going to be a key source of data center growth and energy is one of the key inputs to running the large data centers.”
The decision provides a boost for gas-fired plants in the race to supply power for the artificial intelligence boom. Gas-fired plants are widely seen as the most competitive power solution because they’re far cheaper and faster to build than reactors and, unlike wind and solar, can operate around the clock.
Stressed Grid
President Donald Trump, who has supported the need to deploy AI for national security and economic interests, said last month that power plants need to be built alongside data centers to bypass delays and reliability issues posed by connecting to an increasingly stressed grid.
Data centers need a steady flow of power around the clock and intermittent renewables cannot provide that power quality, said Teri Viswanath, lead economist of power energy and water at CoBank ACB in Denver.
“This is clearly a signal from a regulator that not all sources of power supply are created equal,” she said.
Shares of independent power generators rose. Talen Energy Corp. and Vistra Corp. gained more than 0.7% as of 3:06 p.m. in New York, while Constellation Energy Corp. was up 0.4%.
The new facilities, which will likely include big natural gas generators, would have been stuck at the back of the line to wait for the grid to complete its interconnection queue reforms. Instead, they will join a batch review of 55 gigawatts of legacy projects, including renewables and batteries, this spring. This is a one-time ticket for some to jump the line.