By combining flexible grid connections with bring-your-own capacity (BYOC) arrangements, data centers can reach full operation years sooner while maintaining reliability and improving affordability for all customers, a new report said.
The report, “Flexible Data Centers: A Faster, More Affordable Path to Power,” was prepared by Camus, encoord and Princeton University’s Zero Lab.
Two bottlenecks dominate the data center interconnection process, the report said. “Transmission constraints occur when lines cannot carry additional power without upgrades, while generation constraints arise when the system lacks sufficient accredited generation capacity to provide firm service for new load. Both constraints are often binding.”
In the PJM Interconnection, the most recent capacity auction reached its price cap while transmission upgrades often face multi-year delays, the report said.
“Traditionally, the only remedies are to wait for new infrastructure or shift development to a different location -- neither of which meets the speed-to-power needs of today’s AI-driven data center buildout.”
Flexible grid connections and BYOC programs provide a two-part solution that directly addresses these bottlenecks, the report said.
Under a flexible grid connection, a data center receives both firm (uninterruptible) service and conditional firm service, where a portion of the load uses grid power in normal conditions and relies on on-site or co-located resources -- including demand-side flexibility -- during limited periods of system stress.
“Through BYOC programs, the data center directly procures the accredited capacity needed to meet firm-service requirements -- through clean energy PPAs, VPPs, or on-site resources -- rather than waiting years for utility procurement or ISO queue processes.”
Together, these mechanisms replace the traditional “build first, connect later” model “with a different approach: connect now, operate flexibly during the hours the grid is constrained. This approach aligns the data center’s need for rapid access to power with the utility’s or ISO’s obligations to maintain reliability and ensure affordability. Flexible connections address transmission bottlenecks, while BYOC addresses generation bottlenecks.”
To test this integrated approach, Camus led a collaborative analysis with Princeton University’s ZERO Lab and encoord.
The team used a three-tier methodology -- system, utility, and site-level modeling --applied to six real candidate sites within one PJM utility’s territory.
Camus combined the transmission constraints identified by encoord and the system-level capacity findings from Princeton with site-level modeling to determine how an optimal mix of on-site and off-site resources would meet each site’s flexibility requirements.
The study combined:
• encoord’s SAInt platform to simulate available firm transmission capacity and flexibility requirements across hourly time horizons (8760 hours per year) at each site;
• NREL’s REopt model to determine cost-optimal portfolios of on-site flexibility resources
• Princeton’s GenX model to assess generation capacity requirements and system-level cost and emissions impacts
This is the first publicly available study to combine real utility transmission system data, system-level capacity expansion modeling, and site-level capacity optimization to evaluate how flexibility can accelerate data center interconnections, the report said.
“Just as importantly, the methodology demonstrated here provides a repeatable blueprint that any utility can follow, using the tools and data already available for new load studies.”
Key Findings
Key finding #1: Flexible data centers can connect 3-5 years faster
A 500-MW data center using flexible grid connection + BYOC can reach full operation in roughly two years; three to five years faster than traditional interconnection processes, the report said.
Across constrained sites:
- Grid power was available for more than 99% of all hours;
- On-site resources (e.g. batteries, generators, load flex) were dispatched 40–70 hours per year;
- Transmission constraints led to 7–35 curtailed hours annually, with events lasting 4–16 hours;
- Generation shortfalls added ~32 hours per year, concentrated in extreme weather events
Key finding #2: Flexible grid connections and BYOC significantly reduce and internalize incremental supply costs
A central question for utilities and regulators is whether new data centers increase costs for other customers, the report notes.
The analysis finds that the same tools that accelerate access to power -- flexible grid connections and bring-your-own capacity – “also provide a clear pathway to mitigate or avoid those costs.”
Used together, these mechanisms mitigate new system buildout and shift remaining costs onto the data center, substantially reducing the risk of cost shifts for other customers, the report said.
- Each gigawatt of new data center demand adds $764 million in system supply costs 6 under a traditional firm-only interconnection -- driven by 2.17 GW of required nameplate generation additions across natural gas, storage, solar, and wind;
- Flexible grid connections with 20% conditional firm avoid 273 MW of new build, primarily battery storage and natural gas, eliminating $78 million in incremental system costs per GW;
- BYOC internalizes $326 million in capacity costs per GW, with the data center procuring accredited resources directly and offering them into the market to increase supply;
- Data center payments for the energy portion of their bill cover an additional $329 million per GW of new demand
Across these components, a data center contributes ~$733 million per GW toward the costs associated with its incremental load, reducing the net system cost increase by nearly 100%.
“Flexible grid connections reduce the amount of new capacity the system must build, while BYOC ensures the data center, not other customers, pays for the capacity required to serve its firm load. Flexible data centers also increase utilization of transmission and generation assets, spreading fixed costs more broadly and creating new opportunities to ease rate pressure for all customers.”
The implications
Flexible connections and BYOC offer a faster, more affordable path for integrating large data centers, the report said.
- Speed: three to five years faster access to full power for the data centers
- Affordability: data centers directly cover incremental costs while increasing grid utilization, enabling utilities to spread fixed costs over more electricity sales
- Reliability: data centers gain reliable grid supply for >99% of the year, while utilities gain additional demand side resources to alleviate system stress
“The foundations for rapid progress are already in place. Utilities have the data needed to evaluate flexible grid connections, and the planning tools required to do this work are readily available,” the report said.
“Early demonstrations show this approach can work. What’s needed now is for utilities, regulators, and data center developers to build on that foundation by adopting advanced planning tools, defining clear service agreements, and launching near-term, large-scale demonstrations that make flexible grid connections and BYOC available to data centers that are willing to operate flexibly.”
While the grid will still “require major transmission and generation investments to meet long-term AI-driven demand, flexibility offers the fastest, most practical path forward today. It allows data centers to connect faster, protects reliability, and gives planners the time and breathing room needed to build the infrastructure of the future -- a strategy that strengthens the grid instead of waiting on it.”
