OAKS, Pa. — In a surprise move that could benefit PJM Interconnection, four state governors have submitted a joint proposal formulated with the Data Center Coalition, an industry group, that favors approving connections to data center firms that will generate and add their own power to the grid.

The proposal would offer a fast track approval process for both the data centers and the power sources they would build. The idea was raised recently during a hearing held by PJM, the nation’s largest electrical grid, as it grapples with soaring demands and seeks federal approval later this year to hasten permit reviews.

Pamela Quinlan, a principal at GQS New Energy Strategies, an energy consulting company that represents the DCC, a leading data center trade group, described the eight-page plan as a “voluntary and heavily incentivized” path for the industry.

Quinlan offered limited details during the hearing at PJM’s office near Philadelphia. The proposal generated interest because the four governors—from Pennsylvania, Maryland, New Jersey and Virginia—have been critical of PJM’s operations but eager for data center expansion in their states.

The electricity originated by the centers’ power generators would feed into the PJM’s regional grid, bolstering its reliability, according to the proposal. At least one energy researcher who reviewed the proposal said the strategy may also boost reliance by the new data centers on natural gas.

The DCC is an industry trade group for data center operators and cloud providers. Among its members are the biggest tech companies in the world, including Amazon Web Services, Google, Microsoft and Meta, all of which have invested billions of dollars in developing and deploying artificial intelligence and, in the past couple years, proposing new data centers. AI operations require massive amounts of water and power.

Jacob Finkel, an aide to Pennsylvania Gov. Josh Shapiro, spoke at the hearing and said he was representing the four states, which are in “strong alignment” with the DCC over the proposal.

PJM’s inability to process grid applications in a timely manner has frustrated many governors across the grid operator’s 13-state service area. The other states reliant on PJM are Delaware, Illinois, Indiana, Kentucky, Michigan, North Carolina, Ohio, Tennessee, West Virginia and the District of Columbia. It was not clear during the meeting if the other states were consulted by Finkel.

Data centers require around-the-clock electricity and even brief dips can cost millions of dollars in revenue. The fast-track proposal aims to accommodate lucrative investment from tech and financial firms in some pivotal states.

States oversee the siting, permitting and environmental review for commercial projects that require grid access. The states also assess land-use or rights-of-way and construction approvals related to the construction of electric lines and substations.