Sarah: Third time this year the DOE has told hyperscalers to fire up the diesel and keep PJM's lights on.
Sarah: At what point does emergency just become the plan?
Sarah: If you're just joining
Sarah: the federal large-load interconnection fight is about who gets to set the ground rules when data-center-scale demand plugs into the grid.
Sarah: FERC and DOE have been testing the line between standardized regional procedures and state authority
Sarah: and FERC's already put six regional operators on a 60-day clock: change your tariffs
Sarah: or explain why the rules you've got are good enough.
Matt: This is the Data Center Daily.
Matt: Today — a state commission finally asks whether it needs rules
Matt: a REIT that owns Walgreens is buying into hyperscale
Matt: and Kline Township residents sat through six hours of AWS and still can't get a water number.
Matt: Let's go. If you want to keep up with Federal data center cost allocation fight, tap follow so the next episode lands in your feed.
Sarah: This one's from TFTC:
Quote: Energy Secretary Chris Wright issued two emergency orders on June 30 2026
Quote: directing PJM Interconnection to deploy backup generation resources at AI data centers and other large commercial loads through 11:59 PM EDT
Quote: July 3 per the DOE press release.
Quote: PJM is forecasting a potential new all-time peak load of 166,304 MW on Thursday July 3
Quote: covering 13 states and Washington D.C.
Quote: a grid serving more than 67 million people.
Matt: Third time in 2026. Third.
Matt: Chris Wright signs two more 202(c) orders June 30, PJM's dispatching diesel at the data centers through July 3rd.
Matt: At what point do we stop calling it an emergency and just call it the plan?
Sarah: And here's the number that makes it hit — PJM's projecting a 166,304 MW peak July 3rd.
Sarah: That squeaks past a record set in 2006, back when the AI data center didn't exist in the footprint at all.
Matt: Right, so the new load shows up, and the fix is bolting diesel gensets to a hyperscaler campus and letting the feds flip the switch.
Matt: Nobody priced that into the capacity market.
Sarah: Exactly. PJM's capacity auction was never built to value that kind of reliability backstop.
Sarah: Applications came in June 27th and 29th, orders went out the 30th.
Sarah: The framework's improvising in real time.
Matt: Three orders in six months creates a precedent.
Matt: The government just established it can commandeer private generation any time reserves get tight — and somebody eats that fuel bill.
Sarah: That's the escalation to sit with as the week closes.
Sarah: The capital markets priced these assets as smooth infrastructure; the grid operator lived three emergency orders.
Sarah: Same assets, two very different stories.
Sarah: This one's from PA Environment Digest Blog:
Quote: The Public Utility Commission published notice in the July 4 PA Bulletin inviting comments on the possibility of promulgating regulations
Quote: for interconnecting electric loads
Quote: including large loads. Specifically
Quote: the Commission seeks comments on this list of questions and any other topics that interested parties believe should be included in potential
Quote: regulations on the interconnection of electric loads.
Matt: So Harrisburg finally puts a rulemaking docket on paper for large loads.
Matt: Question one: what interconnection issues should we address?
Matt: Buddy, everything. That's the answer. Everything.
Sarah: The notice hits the July 4 Bulletin.
Sarah: Same week we just heard DOE pull the diesel lever for the third time this year.
Sarah: The commission's asking whether it needs rules while the grid's already improvising them.
Matt: And look at question three — different review levels by load size, modeled on generation interconnection.
Matt: They're admitting a 500-megawatt data center should get screened like a power plant
Matt: which is exactly what every county's been screaming about for a year.
Sarah: Question four's the one I'd circle — expedited process when generation's collocated with the load.
Sarah: That's the on-site gas turbine, the backup diesel, getting a fast lane.
Sarah: Read it next to a 202(c) order and it stops being hypothetical.
Sarah: Here's Troutman Pepper:
Quote: On June 18 2026 FERC accepted in part and rejected in part requests for rehearing of its December 18
Quote: 2025 order (December Order) directing PJM Interconnection
Quote: L.L.C. (PJM) to revise its Open Access Transmission Tariff (Tariff) to clarify and establish certain rates
Quote: terms and conditions of service applicable to Interconnection Customers in PJM seeking to serve Co-Located Load (June Order).
Sarah: Update on the federal large-load interconnection fight: on June 18
Sarah: FERC accepted in part and rejected in part the rehearing requests on its December order telling PJM to rewrite the tariff for co-located
Sarah: load. This is the paperwork version of the diesel story we just hit.
Sarah: FERC opened this docket back in February 2025 because PJM's tariff had no clear rates for a data center sitting behind the meter on a
Sarah: generator.
Matt: Right, so the December order started defining co-located load, and now — six months later — we're still adjudicating whose rates apply.
Matt: Meanwhile DOE's out there commandeering the actual generators three times this year.
Matt: The rulebook's getting written on rehearing while the grid's already improvising with emergency orders.
Matt: Harrisburg's just now asking whether it needs rules at all, and FERC's litigating the ones it wrote in December.
Sarah: Three new transmission services for co-located load, accepted in part.
Sarah: If you want to know what the grid operator thinks a data center behind a generator actually is
Sarah: it's finally in the tariff language — partially.
Sarah: From Kent Jackson at Standard Speaker:
Quote: “We did get a lot of ‘I’m not sure,’” Daniel Leshko said during the hearing when he raised questions about the supply and cost of
Quote: electricity and whether homeowners in the village of Haddock where he lives will be required to connect at their cost to a sewer line that
Quote: Amazon would install for the data center.
Matt: Six hours, two nights, in a school gymnasium, and the residents walk out with — quote — 'a lot of I'm not sure.'
Matt: On power cost. On water.
Matt: On whether their own homes have to pay to connect to Amazon's sewer line.
Matt: This is the third jurisdiction this week running the same playbook.
Matt: AWS shows up, runs the clock, and the transmission and water numbers still aren't on the table when everyone goes home.
Sarah: 380 acres off Lofty Road, and the questions on the record are blasting, mine subsidence, backup generators.
Sarah: A zoning meeting shouldn't sound like the due-diligence checklist the applicant was supposed to bring.
Sarah: And here's the whiplash — same week the PA PUC opens a comment docket asking whether it should even have interconnection rules for large
Sarah: loads. Kline Township's living the answer while Harrisburg's still drafting the question.
Matt: Right. The planners don't even have to decide yet.
Matt: So the guy asking about home-shaking vibrations gets 'I'm not sure' and a follow-up date. Great process.
Sarah: Bisnow, with Emily Wishingrad:
Quote: Out of the gate, the venture is poised to acquire three assets in Northern Virginia's Data Center Alley valued at over $6B.
Quote: The first acquisition is expected to close in the third quarter of the year.
Quote: That data center is fully leased.
Quote: The venture expects to acquire the two other assets, which are still under development, once they are completed.
Sarah: Realty Income — the net-lease REIT that owns your local Walgreens and Winn-Dixie — is putting a billion-four into hyperscale data centers.
Sarah: Forty-five percent stake, $700 million funding this quarter.
Sarah: Three assets in Data Center Alley, valued north of $6 billion.
Sarah: One's fully leased and closing in Q3; the other two are still under development.
Sarah: Note the phrasing — stabilized, investment-grade tenants, triple-net.
Sarah: That's a bond wearing a data center's clothes.
Matt: So the same vehicle that owns strip-mall drugstores now wants a slice of Loudoun County power draw.
Matt: That tells you the trade is getting crowded — institutional money chasing already-energized capacity.
Matt: And it rhymes with the Blackstone-DLR structure — hyperscalers offloading the real estate to whoever wants the yield.
Matt: But here's my question after the DOE piece we just hit: when the emergency orders keep coming and somebody has to eat the backup diesel bill
Matt: is that in the triple-net lease?
Matt: Or does the REIT find out later?
Sarah: They start stateside and plan to expand into Europe.
Sarah: Another data point on whether this offload-to-institutional-capital model is turning into a template or staying a one-off.
Matt: Template. When Walgreens' landlord is in the game, the era of hyperscalers owning their own buildings is over.
Host: If you track data centers, you're probably tracking AI demand too.
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Host: What we're watching next: PJM's forecast all-time peak load test lands today
Host: with DOE backup-generation orders running through 11:59 PM Eastern.
Host: Amazon has 30 days to answer technical questions from Kline Township's engineers and consultants.
Host: And the Realty Income
Host: Cloud Capital and institutional-investor venture expects its first Northern Virginia acquisition to close in the third quarter.
Host: Links to every story we covered are in the show notes, so take a look if one deserves a deeper read.
Host: That's The Data Center Daily for today.
Host: This is a Lantern Podcast.