Officials issue their highest alert yet on data centers’ electricity demand
North America’s grid reliability watchdog is sounding the alarm over data centers and calling for immediate action from grid operators. This week, the North American Electric Reliability Corporation (NERC) issued a level 3 alert — its highest warning tier — over how data centers risk destabilizing the grid.
The alert makes recommendations on managing how “computational loads” are integrated and managed on the power grid. That includes artificial intelligence data centers, cryptocurrency mines and cloud computing facilities. After issuing a lower-level alert in September 2025, NERC found that the groups running the grid, such as utility companies and regional operators, “did not have sufficient processes, procedures or methods to address risks associated with computational loads,” NERC said in the document.
The alert comes as data center proposals are growing ever-larger. And if built, the electricity demand from some individual data centers will dwarf the electricity consumption of neighboring cities and entire states. NERC has found that when such large power users turn their computers on or off unexpectedly, the risk of power outages across the grid goes up. In response, NERC is asking data center companies, utilities and grid operators to immediately address the problem, while laying the groundwork for mandatory rules that could be passed by the Federal Energy Regulatory Commission (FERC).
“The goal is to ensure that as more industrial-scale consumers connect to the grid, they actively participate in practices that protect grid stability,” NERC said in a statement.
What is the grid reliability risk?
Small disruptions to the grid occur frequently. A lightning strike can knock out a transmission line. A heat wave can push equipment to its limits. A rapid rise in demand can affect the voltage and frequency of the entire system. That frequency needs to stay steady, or else critical equipment may be damaged.
“Sudden surges in electricity output that can come from generators coming online or demand going offline. That’s a problem. It can destabilize the frequency,” said Ed Hirs, an energy fellow at the University of Houston.
The grid is engineered to absorb those shocks — but it relies on being able to predict how large electricity consumers will respond when they occur. In a report following its 2025 alert, NERC found that the response from data centers was not predictable. Further, during a grid disruption, large loads could go completely offline, heightening stress on the entire system.
Of the nearly 33,282 megawatts of currently operational data center load that NERC evaluated, grid modeling tools could not predict how about 25,504 megawatts — 77% — of facilities would behave during a disturbance, according to the report.
The Data Center Coalition, a trade group representing project developers, argues that data centers can benefit the grid by incentivizing new generation. In a statement to Straight Arrow, the coalition’s vice president of energy, Aaron Tinjum, said NERC’s guidance needs to “recognize the essential role served by data centers, reflect the technical capabilities and limitations of data center equipment, and do not single out one industry or end-use of electricity for disparate treatment.”
Data centers are growing
Grid operators have limited time to figure out how to integrate large loads.
Demand forecasts collected by NERC indicate that the amount of power needed for large loads could increase by as much as 300 gigawatts between 2028 and 2030. Most of that is from data centers.
In Utah, a data center approved this week will require 9 gigawatts of electricity — more than twice the amount of power typically needed across the entire state. The 40,000-acre campus is backed by Shark Tank star and investor Kevin O’Leary, but it faced stiff opposition from rural communities in northwest Utah.
READ MORE: A data center is moving into a small town. Residents say it will ruin their history
In Texas, there are so many data center proposals that the state’s grid operator, the Electric Reliability Council of Texas, said peak electricity demand will more than quadruple by 2032, if all of the facilities are built.
What is NERC asking the industry to do?
The Level 3 alert stops short of creating new mandatory rules, which is under the jurisdiction of FERC. However, NERC’s guidance is considered a best practice, and FERC considers NERC’s input when making enforceable rules.
NERC is directing utilities and grid operators to collect detailed information from data center companies. That includes how fast their facilities can ramp electricity consumption up or down, how their protective equipment responds during grid disturbances and what backup power systems they have on site.The recommendations also include establishing direct communication channels in case of emergency.
Utilities and grid operators will have until May 11 to report their progress to NERC. The results will be shared with federal regulators as part of a broader push to oversee the growing data center industry.
Round out your reading
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- We’re building a new Straight Arrow. Help us shape our future by taking our survey.
Ella Rae Greene, Editor In Chief
