Data Centers Poised to Become Grid Assets

Demand response measures could help stabilize power grids as data center growth surges

Apr. 2, 2026 at 10:06pm

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A highly detailed, glowing 3D macro illustration of the internal components of a data center, including server racks and cooling systems, illuminated by neon cyan and magenta lights, conceptually representing the complex, high-tech nature of modern data centers and their role as critical digital infrastructure.As data centers become increasingly vital to the modern grid, demand response measures could help stabilize power supplies and enable continued growth of this essential digital infrastructure.NYC Today

Rising electricity prices are prompting more states to threaten moratoriums on new data centers, but utilities, tech companies and grid operators say there's an easier solution: turn down the power. Demand response measures are popping up in utility contracts, state legislation, business deals and even public statements from the biggest U.S. tech companies, as they agree to reduce power use at data centers when the grid is stressed.

Why it matters

With as many as 50 gigawatts of new data centers expected to come online by 2030, policymakers are figuring out how to turn demand response into a standard part of data center operations. This could help stabilize power grids and prevent moratoriums on new data centers in states facing electricity supply challenges.

The details

Lawmakers in Texas have included demand response requirements in a sweeping bill, while a California bill would require demand response in data center contracts. Utilities and data center operators are also striking direct agreements, with 36 states approving or proposing 77 specialty electricity agreements that contain demand response provisions. The speed at which data centers want to get up and running provides an opportunity to include flexibility in negotiations that benefits both sides.

  • In 2025, Texas passed a bill including demand response requirements for data centers.
  • A California bill requiring demand response in data center contracts is set for a hearing this month.
  • By 2030, as many as 50 gigawatts of new data centers are expected to come online.

The players

Judy Chang

Federal Energy Regulatory Commissioner, who said "The price signals clearly are not enough to drive the investments on demand-side responses."

Varun Sivaram

CEO of Emerald AI, a company that produces software to help manage data center workloads in response to grid pressures

Martin Ross

Senior research economist at Duke University, who said "The biggest driver at the moment is the speed at which companies want to get up and running, which provides an opportunity to include flexibility in negotiations in a way that benefits everyone."

Google

A major tech company that has agreed to turn down power use at its data centers across the South and Midwest when the grid is stressed, building in 1 gigawatt of demand response.

Smart Electric Power Alliance

A nonprofit that says 36 states have approved or proposed 77 specialty electricity agreements with large-load customers, 17 of which contain demand response provisions.

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What they’re saying

“The price signals clearly are not enough to drive the investments on demand-side responses.”

— Judy Chang, Federal Energy Regulatory Commissioner

“Governors and regulators need to understand that if they want data centers to come to their states, they should offer a fast track for these good citizen data centers. Come here because you'll utilize my existing grid, keep things stable, and you'll lower rates for everyone.”

— Varun Sivaram, CEO, Emerald AI

“The biggest driver at the moment is the speed at which companies want to get up and running, which provides an opportunity to include flexibility in negotiations in a way that benefits everyone.”

— Martin Ross, Senior Research Economist, Duke University

What’s next

Lawmakers in Texas are working on language that would allow flexible loads to plug into the grid faster, while a California bill requiring demand response in data center contracts is set for a hearing this month. Similar legislative proposals have been made in states like Maryland and Colorado.

The takeaway

As data centers proliferate, policymakers and utilities are recognizing the need to integrate demand response measures to help stabilize power grids and avoid moratoriums on new data center construction. This win-win solution allows data centers to come online quickly while also providing grid flexibility.