PJM tries to ease threats to grid from supersize data centers
PJM tries to ease threats to grid from supersize data centers
By PETER BEHR | 09/17/2025 06:21 AM EDT
Under the proposal, the mid-Atlantic grid would turn off power to data centers before ordering rolling blackouts in an emergency.
Data centers are in Ashburn in Loudon County, Virginia, on July 16, 2023. The centers house the computer servers and hardware required to support modern internet use, including artificial intelligence. Ted Shaffrey/AP
The potential threat to grid reliability from supersize AI data centers has grid operators searching hard for answers, with the latest initiative a new policy proposal from PJM Interconnection, the largest U.S. regional power market.
The PJM proposal would impact large new data center operations that are not using energy they have developed or acquired. Under emergency situations, PJM operators would cut off power to these data centers first, before ordering rolling blackouts at utilities or other responses.
The same issue confronts grid operators across the United States. PJM’s response stands out because its 13-state region, with 67 million customers, is the nation’s largest, and it hosts “data center alley” in northern Virginia, by far the largest U.S. concentration of the data farm installations.
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The North American Electric Reliability Corp., the interstate grid’s security monitor, has a top-level planning committee developing policy proposals for managing data center challenges.
“There is already evidence that large loads impact bulk [wholesale power] system reliability,” NERC said in a committee report in July, citing grid disruptions in Virginia and Texas. NERC’s follow-up report with action proposals is scheduled for release later this year.
PJM’s policy welcomes the data center boom, joining President Donald Trump and the leadership of the power sector. PJM says it aims to enable “new large loads to connect as rapidly as possible and at the same time determine a plan for how reliability is maintained.”
The proposal would keep PJM from having to increase the system’s capacity to meet the peak demand from new data centers. But data centers that didn’t, or couldn’t, acquire enough generation to run their operations would face a risk of unpredictable power cutoffs when the PJM grid is stressed.
The proposal does not speak directly to a second critical issue stemming from the AI data center shock wave — how the plan will deal with the rapid increase in utility bills triggered by the data center’s power demands, said Tom Rutigliano, senior advocate for climate and energy at the Natural Resources Defense Council.
“Forecasts for data center growth far exceed the rate PJM can add power plants,” NRDC said in a statement Monday. The increased power demand is expected to continue inflating electricity prices now, with faster acceleration beginning in mid-July 2028, NRDC said.
NRDC stated, “PJM’s plan aims to prevent blackouts, but fails to protect consumers from ever-increasing bills. Electricity costs in the region are up $12 billion this year alone.
“Based on calculations by NRDC using PJM data, under PJM’s plan the public will pay over $20 billion every year from 2028 through at least 2032 as forecast data centers continue to drive up prices,” according to NRDC. “This adds up to a $100 billion or higher bill over this period paid by PJM residents. Virtually all of this will be windfall payments to existing power plants rather than investment in new ones.”
Rutigliano said NRDC cost figures derive from existing formulas that PJM uses to establish “capacity” payments in annual auctions. These payments to power plant operators are to incentivize enough generation to keep operating to cover expected power demands in future years. They are ultimately paid by utility customers.
NRDC’s calculation assumes that increasing data center power demand will keep capacity prices at established ceiling prices, he added.
PJM’s proposal will be open for discussion by PJM’s membership, with a final plan expected to be submitted by this December to the Federal Energy Regulatory Commission for approval. PJM aims to have it in effect for the capacity auction to secure power supply for the mid-2028 to mid-2029.
“To PJM credit, they’re grappling with the problem,” Rutigliano said.
“PJM’s proposal is very much a work in progress, and is expected to change,” said PJM senior communications manager Jeffrey Shields. “PJM received significant feedback from stakeholders and is willing to evolve its proposal, drop elements altogether and incorporate entirely new frameworks into its proposal that are proposed by other stakeholders.”
“If we do nothing, there is definitely a higher risk of reliability issues including power outages,” Shields added.
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