North America’s top grid reliability watchdog is escalating its warning over the rapid growth of data centers, issuing its most serious alert yet and urging immediate action from utilities, operators and tech companies.
The North American Electric Reliability Corporation (NERC) this week released a Level 3 alert — its highest warning tier — focused on the risks posed by so-called “computational loads.” These include artificial intelligence data centers, cryptocurrency mining operations and large-scale cloud computing facilities that are increasingly demanding enormous amounts of electricity.
The alert follows an earlier, lower-level warning issued in September 2025. In the months since, NERC concluded that grid operators and utilities still lack adequate tools to manage the unique risks posed by these massive and fast-changing power users. In its latest document, the organization said operators “did not have sufficient processes, procedures or methods to address risks associated with computational loads.”
At the heart of the concern is scale — and unpredictability. Data centers are growing larger at a pace that is outstripping the grid’s ability to adapt. Some proposed facilities, if built, would consume more electricity than entire cities or even states. Unlike traditional industrial users, these facilities can ramp their power use up or down extremely quickly, creating sudden swings in demand that are difficult to manage.
“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.
Electric grids are designed to handle disruptions. Everyday events such as lightning strikes, equipment failures or heat waves can temporarily strain the system. But maintaining stability requires a careful balance between supply and demand, particularly when it comes to grid frequency — a measure that must remain steady to avoid damaging critical infrastructure.
Experts warn that large, rapid shifts in power consumption can upset that balance. “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 relies heavily on predictability to absorb these shocks. Operators need to anticipate how large users will respond during disturbances so they can compensate in real time. However, NERC’s analysis suggests that this predictability is lacking when it comes to data centers.
In a follow-up report to its 2025 alert, NERC found that the behavior of many data centers during grid disruptions could not be reliably modeled. In some cases, large facilities may disconnect entirely during disturbances, increasing stress on the rest of the system.
The numbers are striking. Of the roughly 33,282 megawatts of operational data center load studied by NERC, about 25,504 megawatts — or 77% — could not be accurately predicted using existing grid modeling tools. That level of uncertainty poses a significant challenge for operators trying to maintain stability during emergencies.
Industry representatives argue that data centers are not just a burden on the grid, but also a potential benefit. The Data Center Coalition, which represents developers, says the growing demand can help drive investment in new power generation. In a statement to Straight Arrow, the group’s vice president of energy, Aaron Tinjum, said NERC’s guidance should “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.”
Still, the pace of growth is intensifying the urgency of the issue. NERC forecasts indicate that demand from large loads could increase by as much as 300 gigawatts between 2028 and 2030 — with data centers accounting for the majority of that growth.
Recent project announcements underscore the scale of what’s coming. In Utah, officials approved a massive data center campus this week that is expected to require 9 gigawatts of electricity — more than double the state’s typical total demand. The 40,000-acre project, backed by investor Kevin O’Leary, has already faced opposition from rural communities concerned about its impact.
Texas is seeing a similar surge. The Electric Reliability Council of Texas has warned that if all proposed data centers are built, peak electricity demand in the state could more than quadruple by 2032.
NERC’s Level 3 alert stops short of imposing new mandatory requirements, which fall under the authority of the Federal Energy Regulatory Commission. However, the alert carries significant weight and is likely to influence future regulations.
For now, NERC is calling on utilities and grid operators to act quickly. Its recommendations include gathering detailed operational data from data center operators, such as how quickly facilities can adjust their power usage, how their systems respond to grid disturbances and what backup power capabilities they maintain.
The organization is also urging the establishment of direct communication channels between grid operators and large data centers to ensure rapid coordination during emergencies.
Utilities and operators have until May 11 to report their progress. Those findings will be shared with federal regulators as policymakers consider how to oversee an industry that is becoming an increasingly dominant force on the electric grid.
