Federal regulators order grid operators to fast-track connections for AI data centers, citing competition with China and the need to accommodate surging power demand.

What happened: The Federal Energy Regulatory Commission (FERC) voted unanimously to direct six regional grid operators to connect AI data centers and other large power users to the electricity transmission system more quickly. Data centers must pay the full cost of any grid upgrades needed for their connection. Grid operators have 30 days to report on how they will ensure adequate power supplies, and 60 days to present plans for integrating large power users under the new guidelines.

Why it matters: Tech companies are struggling to find enough power for data centers, with some reporting it will take years to connect to the grid. Energy Secretary Chris Wright pushed FERC to act to help the U.S. compete with China in AI. However, the order comes as construction of data centers is outpacing the speed of new power plants coming online, and data centers now account for about 5% of U.S. electricity demand but could triple by 2035. FERC chair Laura Swett emphasized the commission is taking seriously concerns about affordability and ensuring rates remain reasonable.

What to watch: The six regional grid operators serve 200 million Americans, or two-thirds of FERC's jurisdiction. FERC invited utilities handling other regional transmission systems to participate and could eventually pressure them too. Data from the Electric Power Research Institute shows data centers could triple their electricity demand by 2035.