Energy firm AEP Ohio has filed a settlement agreement to address the power demands of Ohio’s data center sector.

The agreement was filed alongside the staff of the Public Utilities Commission of Ohio (PUCO), the Ohio Consumers' Counsel, the Ohio Energy Group, Ohio Partners for Affordable Energy, and Walmart.

The filing, which is subject to review and approval from PUCO, will require new data center customers to pay for a minimum of 85 percent of the energy they say they need each month, even if they use less, to cover the cost of infrastructure required to bring electricity to those facilities.

"Ohio's economic success in bringing data centers to our state comes with immense demands for electricity, and we have to meet those efficiently and responsibly," said Marc Reitter, AEP Ohio president and chief operating officer.

The filing will create a sliding scale, allowing small and mid-sized data centers increased flexibility.

In addition, it will require data centers to provide proof they are financially viable and able to meet those requirements, and pay an exit fee if their project is canceled or unable to meet the obligations outlined in the electric service agreement contract.

If approved, the requirements will be in place for up to 12 years, including a four-year ramp-up period.

The agreement also outlines a process to end the moratorium on new Central Ohio data center agreements.

Data center expansion has recently surged across AEP Ohio's service area, particularly in Central Ohio. The growing presence of these facilities is a critical factor behind the region's soaring electricity demand, which is now projected to more than double by 2030.

Data center growth is expected only to increase, as demonstrated by several notable announcements over recent months. For example, earlier this month, Microsoft announced it is set to build a $420 million data center in New Albany, Ohio.

To combat the growing demand, PJM has presented a proposal to permit “shovel-ready” energy projects and an expedited route to interconnection to meet grid reliability needs. Ohio currently has 421 active requests for interconnection, representing 37.9GW of capacity.