Since 2025, the United States Department of Energy (DOE) has issued a number of emergency orders pursuant to section 202(c) of the Federal Power Act (FPA) to ensure the continued operation of various generation units across the United States. A common application of section 202(c) orders has been to extend the operation of coal plants beyond their scheduled retirement dates. See our January 26, 2026 article, “DOE Issues Emergency Orders to Keep Generation Units Operational Citing Electric Supply Shortages,” for more information. More recently, the DOE has issued a handful of emergency orders authorizing grid operators to call upon transmission owners to deploy backup generation resources at large load facilities, including data centers, as a last resort for needed power during certain emergency conditions.
Secretary of Energy Letter to Reliability Coordinators and Balancing Authorities
On January 22, 2026, the Secretary of Energy (“Secretary”) addressed reliability coordinators and balancing authorities on the issue of its emergency orders. The Secretary asserted that the DOE would be prepared to issue emergency orders to ensure the “gigawatts of readily available backup generation that have remained largely untapped” and “which would otherwise stand idle” are available during certain emergency conditions. Specifically, the Secretary provided that reliability coordinators and balancing authorities need only notify the DOE, even merely via phone call, that an emergency is expected, upon which the DOE will authorize the direction of backup generation facilities to run as a last resort before declaring a level 3 Energy Emergency Alert (EEA) to avoid potential blackouts, if appropriate. The Secretary’s letter noted the expectation that reliability coordinators and balancing authorities would work with facilities to prioritize the dispatch order of backup generation to consider certain facilities serving a critical reliability or backup need (e.g., hospitals, 911 call centers, natural gas pipeline facilities, etc.). The Secretary’s letter was issued in anticipation of potential winter storm events, and several emergency orders were subsequently issued at the end of January 2026.
Emergency Orders Targeting Data Centers
The Secretary’s letter does not specifically identify data centers or other large loads as the targeted entities with such readily-available untapped backup generation. However, relevant emergency orders issued by the DOE following the issuance of the Secretary’s letter explicitly provided authorization for grid operators to direct backup generation sources at data centers and other large load customer sites to operate as a last resort before declaring an EEA 3 or during an EEA 3. During energy emergencies (e.g., generation shortages due to inclement weather), reliability coordinators may initiate an EEA at its own request or upon the request of an energy deficient balancing authority. The reliability coordinator may declare whatever level it deems necessary, but before a deficient balancing authority may request an EEA 3, it must make use of all available resources.
As directed in the Secretary’s letter, DOE emergency orders were issued in January following requests made by PJM Interconnection, L.L.C. (PJM), Duke Energy Carolinas, LLC and Duke Energy Progress, and the Electric Reliability Council of Texas during the impacts of Winter Storm Fern. The DOE issued further emergency orders in May and during the summer months of June through August, in response to requests and in anticipation of hot weather conditions, for PJM (in May, June, and July with extension) and Southwest Power Pool, Inc. (SPP) (with two in July and the second with extension into August). Requests by PJM and SPP specifically requested authorization to utilize backup generation facilities at large load customer sites to mitigate risks to the bulk-power system. PJM’s request for the May order specifically asked for authorization to “allow the Transmission Owners and Electric Distribution Companies to disconnect the data centers from utility source power to automatically transfer them to back up generation.” Similarly, SPP’s requests for both July orders specifically asked for authorization to “deploy backup generation resources … at data centers … and at other large load industrial and commercial customer sites.”
Curtailing Large Loads to Protect Reliability
Some stakeholders have questioned the benefits of these DOE emergency orders to the grid given the lack of dispatch instructions. While none of the entities which received the DOE’s authorizations have actually utilized such power, such authorizations provide support for the notion that adoption of data centers can be “grid assets” and not “grid liabilities.”
At least one region is going a step further than the DOE emergency orders. Enacted in June 2025, Texas Senate Bill 6 goes beyond the common structure of a voluntary demand response framework to provide ERCOT with the authority to direct curtailment of large loads over 75 MW during declared grid emergencies. As the Public Utility Commission of Texas continues to work through its rulemakings to implement the bill, industry and decisionmakers should monitor whether such a novel framework for turning large loads into strategic grid resources can demonstrate valuable reliability benefits in the face of data center proliferation. Notably, given the formal rulemaking associated with the bill’s implementation and development of rules and mechanisms, such a framework may consider and alleviate potential negative impacts on environmental protections related to the use of backup generators, which was recognized as a point of contention under the DOE emergency orders. Indeed, the Sierra Club has argued in one of the rulemaking proceedings for an extra layer of scrutiny for large loads seeking to interconnect directly with existing generation resources powered by fossil fuels.
For more information, please contact Sean M. Neal, Andrea I. Sarmentero Garzón, or Paige Punzalan.
