Mid-Atlantic electric grid PJM not ready for data center boom, experts warn

Big Tech wants to build more data centers in mid-Atlantic states like Pennsylvania and Virginia, but some experts say the electric grid isn’t ready. As investments continue to pour into the region served by the PJM electric grid, experts warn that the grid already faces a backlog of renewable energy projects waiting to connect, as well as a pricing structure that has led to skyrocketing consumer costs.

“These data centers couldn’t come at a worse time for PJM,” Jon Gordon, policy director at Advanced Energy United, said at a media briefing organized by the Reliable Grid Project.

Named for the states where it first started, Pennsylvania, New Jersey and Maryland, PJM is the largest regional electric grid operator in the United States. It serves 65 million Americans across 13 states, stretching from Chicago to Washington, D.C. Within the region, local utility companies serve customers directly, but PJM operates the market where utilities buy power. PJM also works to prevent blackouts by monitoring the flow of electricity and ensuring that supply and demand remain in balance.

Both Big Tech and the Trump administration are pushing for a rapid build-up of artificial intelligence, in part, to maintain a national security edge over foreign adversaries and to grow the economy. Across the country, tech companies are signing energy deals, and utility companies are rushing to provide the required energy for a substantial increase in computing power.

A single large data center can consume more power than 48 hospitals, and a recent report from Virginia’s Joint Legislative Audit and Review Commission found that data centers currently consume as much electricity as 60% of homes in the state. Continued data center growth depends on a reliable grid that can expand its capacity to generate electricity.

How many data centers are planned for the PJM territory? 

PJM’s territory already has the highest concentration of data centers in the U.S., and the new additions show no signs of stopping.

On Tuesday, July 15, President Donald Trump visited Pittsburgh, Pennsylvania, to highlight investments in data centers and promote coal, gas and nuclear power. The Pennsylvania Energy and Innovation Summit coincided with multi-billion-dollar announcements from Google and investment firm Blackstone to build data centers in the state. Months earlier, Amazon Web Services also unveiled a $20 billion plan to build data centers in Pennsylvania.

Virginia is home to more data centers than any other state with 586 currently in operation, according to datacentermap.com. The website tracks cloud computing, cryptocurrency and “hyperscale” centers Big Tech typically uses to run AI tools. Maryland, New Jersey, Pennsylvania, Ohio and Washington, D.C. — all within PJM’s territory — are home to more than 400 data centers combined.

Data centers can quickly shut down, which is already creating challenges for grid operators. In July 2024, a number of data centers in Virginia abruptly powered down in an event that came close to causing cascading blackouts, according to a Reuters report. The North American Electric Reliability Corporation reported a similar event in February and recommended, in an April report, that federal regulators take steps to mitigate risks from a sudden loss of electric load.

What is the energy backlog problem?

Supply has not kept up with this increasing electricity demand.

Companies that want to build wind, solar or power plants to add more electricity to the PJM grid are hitting a major bottleneck. Before projects start construction, developers need to sign an agreement with PJM assuring that the project will be able to connect to the grid. However, studies from Columbia University and the Lawrence Berkeley National Laboratory show that many developers wait five years in the interconnection queue — a list of projects that have requested to connect to the grid but have not yet signed an agreement.

“There’s enough of those resources in the queue to replace all of PJMs resources today,” Gordon said.

More than 90% of that queue is made up of wind, solar and battery storage projects that could help meet growing electricity demand. Due to the lengthy approval process, these resources remain offline while data centers continue seeking locations in the region.

In 2022, PJM stopped taking any new interconnection requests until 2026 to clear the bottleneck. While ongoing efforts aim to expedite the process, the backlog poses a significant challenge for integrating large electric loads, like data centers.

“A data center can be built much more quickly than the infrastructure needed to support it,” Gordon said. He added that much of PJM’s underlying infrastructure is already getting old and many existing power plants are nearing the point of retirement.

What is PJM’s capacity market? 

Experts also worry about PJM’s capacity market, which holds annual auctions to provide power three years in advance and help cover fixed costs. The intention is to maintain a sufficient electricity supply for future peak demand and incentivize energy companies to make long-term investments in new power plants.

Ric O’Connell, executive director of the nonprofit Grid Lab, said the capacity market is “almost like an insurance product.”

Even though many data centers are not built yet, they are still making the capacity market more expensive, because capacity market auctions consider future demand forecasts.

 “Consumers are on the hook for paying for this future demand,” said Clara Summers, a campaign manager at the nonprofit Citizens Utility Board of Illinois.

Summers and other experts speaking at the briefing suggested a range of potential solutions to prevent consumers from continuing to pay the price for data center expansion. These include requiring data centers to make a down payment for long-term contracts, creating a separate customer class with different rates, and allowing utilities to curtail power consumption during peak demand periods.