Data Center Site Selection in PJM

PJM operates the transmission grid and wholesale electricity market for all or parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia and West Virginia, plus the District of Columbia. It is part of the Eastern Interconnection and is regulated by FERC.

PJM does not own transmission lines or serve retail customers. Its footprint is divided into transmission zones, each tied to one or more transmission owners. Within those zones, retail service comes from investor-owned utilities, cooperatives and municipal utilities. For a data center, the identity of the local transmission owner and retail provider matters as much as the fact that the site is “in PJM.” Our guide to ISO and RTO markets explains these roles in general.

PJM’s states took different paths on electricity restructuring. Some allow retail choice, where customers buy energy from competitive suppliers while the local utility delivers it. Others keep vertically integrated utilities that own generation and sell bundled service under state-regulated rates. A few have mixed arrangements by utility type.

PJM runs a centralized forward capacity market. Generators and other resources commit to be available years ahead, and load-serving entities pay for that capacity. States, meanwhile, set their own policies on generation mix, retirements and procurement. Together these decide whether the region has enough supply for its peak.

For a data center, this has two effects. First, capacity costs flow into the price of power, and large, steady loads pay them on every megawatt of peak demand. Second, rapid load growth and generator retirements can tighten the supply margin in particular zones, which can make utilities and the RTO more cautious about how fast new large loads connect. Neither is a reason to avoid PJM, but both belong in the site comparison.

Loads do not go through PJM’s generator interconnection queue. A data center applies to its local utility or transmission owner, which studies the request against its own system and coordinates with PJM on regional effects. Large loads are reflected in PJM’s load forecast, and the regional transmission planning process can identify upgrades needed to serve them.

• The transmission owner sets the study steps, deposits and timelines for its zone, so two sites in neighboring zones can face very different processes.
• Upgrades may be local, such as a new substation or line tap, or regional, such as reinforcements that serve many loads.
• Cost responsibility for upgrades depends on the type of upgrade and the applicable tariffs. See transmission upgrades and cost allocation.
• Utilities increasingly ask for firm ramp schedules and financial commitments before committing capacity.

Arrangements that pair a data center with an existing power plant have drawn regulatory attention in PJM and elsewhere. The rules in this area have been evolving, so check the current treatment before relying on it. See co-locating data centers with power plants.

PJM is large and varied, so constraints differ from zone to zone. Several themes come up often.

• Transmission congestion. Zones with established data center clusters can face long timelines and large upgrades for new requests.
• Generation retirements. Where older plants retire, local transmission may need reinforcement, which can delay new large loads nearby or, in some cases, free up a connection point.
• Terrain and geology. Parts of the Appalachian region have steep slopes and karst, which affect grading and foundations.
• Mineral rights. Much of the footprint overlies coal, oil and gas resources, so severed mineral estates are common. See mineral rights and easements.
• Flood and storm exposure. River valleys and coastal areas carry flood and storm risk that must be checked site by site.
• Local restrictions. Some jurisdictions with many data centers have added standards or limits on new ones.

Fiber is a strength in much of PJM. The Mid-Atlantic hosts some of the densest data center fiber in the country, and long-haul routes cross the footprint along interstate corridors. Outlying zones can still be thin on diverse routes, so fiber should be checked for each site.

Water is generally more available than in the arid West, but local supply, treatment capacity and discharge permits still vary. Summers in the southern and coastal parts of the footprint are hot and humid, which affects cooling design and PUE. Northern and higher-elevation areas are cooler. Land prices and tract sizes vary from dense suburban markets to large rural parcels in the interior.

1. 01Identify the transmission zone, transmission owner and retail utility that would serve the site.
2. 02Learn the utility’s large-load process: study steps, deposits, required commitments and typical timelines.
3. 03Map nearby substations and lines, and ask what other large loads are pending on them.
4. 04Check the state’s retail rules and how energy supply would be procured.
5. 05Review local zoning, recent data center decisions and any restrictions in the jurisdiction.
6. 06Screen for slope, karst, flood exposure and severed mineral rights.
7. 07Confirm fiber routes, carriers and diversity.

When we screen sites in PJM, we compare them zone by zone. Sites a few miles apart can sit behind different substations with very different outlooks.