What is behind-the-meter power for data centers?
Behind-the-meter power is electricity generated on the customer's side of the utility meter, usually at or next to the site that uses it. For a data center, it means drawing on an on-site power plant instead of relying only on electricity delivered by the grid.
Also known as: BTM generation, Self-supply, On-site generation
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How it works
The meter is the utility meter that records what a customer takes from the grid. A generator on the customer's side sits behind it.
The Federal Energy Regulatory Commission (FERC) calls PJM the nation's largest grid operator. PJM defines behind-the-meter generation as generation that sits physically behind the retail meter and is not offered into the wholesale market as a generation resource.
A December 2025 Congressional Research Service (CRS) report lists three main ways data centers obtain electricity:
- grid power bought from the local utility
- a power purchase agreement with an off-site plant or provider
- self-supply, also called behind-the-meter, from on-site plants
Behind-the-meter does not have to mean off-grid. Data Center Frontier, a trade publication, reported in October 2026 that most privately powered data centers will keep some reliance on the public grid. Its example was standby or emergency supply.
Why it matters
The International Energy Agency (IEA) said in April 2026 that slow grid connections are pushing U.S. data center developers toward on-site natural gas plants. It said satellite tracking shows about one-fifth of those projects have begun land clearing or construction. It found that reliable on-site gas supply requires 30% to 70% more generating capacity than the data center's demand.
The IEA estimates that 15 to 27 gigawatts of on-site gas may power data centers by 2030, mostly in the United States. It notes that uncertainty is high and that most data centers prefer a grid connection.
CRS reports that some consumer advocates fear data centers sited with power plants could use transmission services without paying for them, leaving other customers to cover the cost. Others counter that such sites do not use the transmission system.
Where things stand in 2026
On December 18, 2025, FERC found PJM's tariff unjust and unreasonable. Its reason: the tariff lacked clear and consistent terms for serving data centers and other large loads co-located with generating facilities. FERC's fact sheet said PJM's existing behind-the-meter generation rules were no longer just and reasonable. It said PJM must let customers serving co-located load choose among four transmission service options.
On June 18, 2026, FERC issued show cause orders to all six regional grid operators under its jurisdiction. It gave them 60 days to justify or revise their rules for large electricity users. One of the five reform categories is accommodating co-location agreements and behind-the-meter generation.
Sources
- PJM Glossary, PJM Interconnection
- Data Center Energy Infrastructure: Federal Permit Requirements, Congressional Research Service (Congress.gov)
- Executive summary – Key Questions on Energy and AI, International Energy Agency (IEA)
- FERC Directs Nation’s Largest Grid Operator to Create New Rules to Embrace Innovation and Protect Consumers, Federal Energy Regulatory Commission (FERC)
- FACT SHEET | FERC Directs Nation’s Largest Grid Operator to Create New Rules to Embrace Innovation and Protect Consumers, Federal Energy Regulatory Commission (FERC)
- FERC Launches Aggressive Targeted Action to Speed Large Load Integration, Federal Energy Regulatory Commission (FERC)
- Data Center Private Power: Who Regulates Behind-the-Meter Generation?, Data Center Frontier
