For the better part of two years, the most important question in large-load power has been a logistical one: how do you energize hundreds of megawatts of new demand when the interconnection queue moves in years and the grid operator is short on capacity? In December 2025, the federal regulator started rewriting the rulebook around one of the fastest answers - putting generation right next to the load. For anyone planning a data center, AI campus, or large industrial site in the nation's biggest power market, the details matter.
What FERC actually ordered
On December 18, 2025, the Federal Energy Regulatory Commission (FERC) issued an order in a show-cause proceeding directing PJM Interconnection - the grid operator for 13 mid-Atlantic and Midwest states plus D.C. - to fix how it handles large loads that co-locate with generating facilities. FERC found PJM's existing tariff "unjust and unreasonable" because its rates, terms, and conditions for co-location arrangements lacked clarity and consistency, according to Utility Dive and legal analyses from Baker Botts.
Critically for anyone weighing on-site generation, FERC also found PJM's behind-the-meter generation (BTMG) rules "no longer just and reasonable," because the tariff did not fully account for loads served by BTM generation in resource adequacy planning. In plain terms: the regulator concluded the old framework for co-located and behind-the-meter power was holding back projects and needed to be modernized.
The new options on the table
The order directs PJM to create clarity in three areas, per the FERC fact sheet: establish new transmission service options for co-located customers, clarify the interconnection procedures co-located projects must follow, and revise the BTMG rules, including a transition and grandfathering process for certain existing customers. PJM was directed to make compliance filings in early 2026 describing, among other things, how co-located customers can access provisional interconnection, request service below a generator's nameplate capacity, and move through an accelerated process.
The throughline is optionality. Instead of forcing every large load into the same multi-year, full-interconnection path, the framework is moving toward defined, faster routes for projects that bring their own generation to the site. That is a structural acknowledgment of what developers have argued for two years: co-located and behind-the-meter power is not a workaround, it is a legitimate way to serve load the grid cannot reach in time.
Why this matters for time-to-power
The backdrop is a capacity crunch. PJM has warned it could face a capacity shortfall as new load outpaces new generation, and reporting from Utility Dive notes developers are ready to build but need firm contracts and clarity to do it. When the public grid is constrained, the value of a defined, contractable path to on-site power rises - and a clearer regulatory framework reduces the risk that a co-located project gets tangled in tariff ambiguity halfway through development.
For a buyer, the practical takeaway is that the regulatory ground under behind-the-meter and co-located power is getting firmer, not shakier. That is the opposite of how on-site generation was sometimes characterized a year ago, when a high-profile co-location case was rejected over reliability concerns. The direction of travel now is toward defined rules that let these projects proceed.
What a buyer should do with this
Three things follow for anyone underwriting large new load on a fixed go-live date. First, evaluate co-located and BTM options on equal footing with a traditional interconnection - the timeline math increasingly favors on-site generation, and the rules are catching up. Second, ask how a developer structures the commercial package: the regulatory clarity FERC is forcing only helps if the offtake itself is built for diligence, with a defined Point of Delivery, clear performance terms, and remedies a lender can underwrite. (We covered that in what a behind-the-meter power SLA actually covers.) Third, move early: provisional and accelerated interconnection options reward projects that are already in motion, not those still deciding.
This is the environment Smartland Energy develops for - dedicated behind-the-meter power for data centers, industry, and defense, structured so the commercial and reliability terms hold up to procurement and lender review. A clearer federal framework for co-location does not change what makes a project bankable; it removes one more reason a good project stalls.
FERC's order is not the last word - PJM's compliance filings and stakeholder process will define the specifics, and other regions will watch how it plays out. But the signal is unambiguous: the largest grid operator in the country has been told to make room for the loads, and the on-site generation, that are defining this decade of power demand. For buyers who cannot wait on the queue, the comparison between grid interconnection and BTM just tilted a little further toward building your own.