The North American Electric Reliability Corporation has issued a rare Level 3 alert — its highest warning level — directing grid operators to take immediate action to address reliability risks tied to rapidly changing data center electricity demand.
The alert follows incidents in which large computational facilities, including those used for artificial intelligence training and cryptocurrency mining, unexpectedly dropped load or caused rapid demand fluctuations, raising concerns about grid stability.
“The grid faces unprecedented challenges from a surge in large power consumers,” NERC said in a statement, noting that summer peak demand across the bulk power system is expected to rise 24% over the next decade. Data centers are projected to account for the majority of that increase.
Under the Level 3 alert, transmission planners, system operators and balancing authorities are required to implement seven specific actions aimed at improving how computational loads are modeled, monitored and integrated into grid operations.
Among the directives, grid entities must collect detailed data on power consumption patterns, including minimum and maximum load levels and the share of energy used for IT versus non-IT functions like cooling. Operators are also instructed to develop commissioning processes for data centers and incorporate testing at full and minimal load conditions.
Additional measures include revising reliability study triggers to account for computational loads and deploying dynamic fault recording devices to better understand how these facilities respond during system disturbances.
Entities must acknowledge receipt of the alert by May 11 and fully respond by Aug. 3.
The move escalates earlier concerns raised by NERC. In 2025, the organization issued a Level 2 warning highlighting insufficient processes and procedures to manage emerging computational loads.
Experts warn that the rapid proliferation of large-scale data centers could have serious implications if not properly managed.
Grid instability linked to these facilities “could become quite severe — to the point of creating widespread blackouts,” said Ben Inskeep, program director at the Citizens Action Coalition.
“It is critical that we have standards in place to protect all ratepayers from negative impacts to grid stability, reliability, and resiliency that are caused by data centers,” Inskeep said.
Industry stakeholders acknowledge that addressing the issue will require significant coordination between utilities, regulators and data center developers.
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“It will take years of coordinated effort in the drafting of new regulations, understanding limitations and opportunities related to physical equipment, understanding limitations and opportunities related to software and control systems,” said Andrew Webber of Digital Power Optimization.
Webber also pointed to a lack of engagement between data center operators and regulators, referencing concerns raised by Federal Energy Regulatory Commission leadership.
“Given the absolutely critical need [for data center developers] to source power for their developments, I found it quite interesting that FERC isn’t seeing more direct engagement from the data center industry,” Webber said.
The Level 3 alert underscores the urgency of aligning the fast-growing data center sector with grid reliability requirements. As computational demand continues to rise, utilities and developers alike face increasing pressure to ensure that infrastructure can support these loads without compromising system stability.
Originally reported by Robert Walton, Senior Editor in Utility Dive.
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