This post is Part 1 of a two-part series on powering data centers. Stay tuned for Part 2 and insights on scaling, off-grid options, and flexible energy strategies.
What Developers Need to Know Before They Build
Power-hungry data centers are at the heart of a digital transformation with the skyrocketing demand for cloud computing, AI, and real-time services. Yet, for many developers, the nuances of how data centers connect to the energy grid can feel like navigating a maze. Before you break ground, it’s essential to understand the ins and outs of grid interconnection—what it takes, who’s involved, and where developers most often get tripped up.
Why These Challenges Exist
The power grid wasn’t built overnight, with many foundational elements dating back 50 years or more. While planning and upgrades occur continuously, the grid’s current calibration largely has not accounted for the size or concentration of today’s data center loads.
Grid Interconnection: A Multi-Year Path
Powering a data center typically requires a lengthy interconnection process with a regional transmission operator or local utility. According to the Lawrence Berkeley National Laboratory, the median wait time for large-scale projects from interconnection request to commercial operation is now approaching 5 years—a timeline driven by the volume of requests, system upgrade needs, and the complexity of integrating high-capacity loads like data centers.
During this process, transmission and resource planners assess whether existing infrastructure can handle the new demand or if major upgrades are required. They also review long-term load forecasts and planned generation capacity to determine if additional resources should be added to the broader resource plan. Because the associated studies and potential system upgrades require extensive time and regulatory approvals, getting into the interconnection queue early is essential.
Tips for a Smoother Interconnection Process
- Study the Local Energy Market: Research who the key players are, what resources are available, and whether certain times of day or year pose higher grid-congestion risks.
- Understand the Regulatory Environment: Explore opportunities for resource sharing, like demand-side management, while maintaining reliability standards.
- Choose Your Location Strategically: Target areas with transmission capacity or minimal system upgrade needs. At 20MW or more, a site will likely require an interconnection above 34.5kV with a dedicated substation.
- Consider Co-locating Generation: Partner with developers to build new generation assets near your data center.
- Learn About Generation Types and Fuels: Know the infrastructure and fuel supply options needed to power new generation.
- Track Regulatory Shifts: FERC, NERC, and other stakeholders will continually adapt regulations as large data centers compete for generation and transmission.
- Engage Early and Collaborate: Once you’ve selected a site, work closely with the local community and utility. Show how your project can help address generation or grid-congestion challenges. Present flexible designs that may also benefit ratepayers by improving local infrastructure.
About NEI Engineering
NEI Engineering delivers critical infrastructure solutions for large-scale data centers, bringing the same deep expertise and problem-solving mindset that has led to over 20GW of successful renewable projects. With more than 300 engineers across the U.S., we specialize in designing reliable, cost-effective electrical systems that ensure seamless grid interconnection, regulatory compliance, and long-term performance. As data center energy demands grow, NEI supports developers, owners, and EPCs with consultative engineering that simplifies interconnection complexity, accelerates timelines, and reduces risk. Whether evaluating high-voltage substation requirements, co-locating generation, or planning for future load growth, NEI’s multidisciplinary teams anticipate challenges before they arise—delivering agile solutions that scale with your operations and ensure uninterrupted uptime.