The former Three Mile Island nuclear power plant in Londonderry Township, Pennsylvania, U.S., June 25, 2025. REUTERS/Eduardo Munoz/File Photo
Laila Kearney
HARRISBURG, Pennsylvania July 9 (Reuters) – America’s largest power grid is under strain as data centers and AI chatbots consume power faster than new plants can be built.
Electricity bills are projected to surge by more than 20% this summer in some parts of PJM Interconnection’s territory, which covers 13 states – from Illinois to Tennessee, Virginia to New Jersey – serving 67 million customers in a region with the most data centers in the world.
The governor of Pennsylvania is threatening to abandon the grid, the CEO has announced his departure and the chair of PJM’s board of managers and another board member were voted out.
The upheaval at PJM started a year ago with a more than 800% jump in prices at its annual capacity auction. Rising prices out of the auction trickle down to everyday people’s power bills.
Now PJM is barreling towards its next capacity auction on Wednesday, when prices may rise even further.
The auction aims to avoid blackouts by establishing a rate at which generators agree to pump out electricity during the most extreme periods of stress on the grid, usually the hottest and coldest days of the year.
High prices out of the auction should spur new power plant construction, but that hasn’t happened quickly enough in PJM’s region as aging power plants continue to retire and data center demand explodes.
PJM has made the situation worse by delaying auctions and pausing the application process for new plants, according to more than a dozen power developers, regulators, energy attorneys and other experts interviewed by Reuters.
“We need speed from PJM, we need transparency from PJM and we need to keep consumer costs down with PJM,” Pennsylvania Governor Josh Shapiro told Reuters in an interview. “I think they’ve taken some steps in that direction which is really encouraging to me and we’re going to continue to work at it.”
PJM says the supply and demand crunch has been caused largely by factors outside of its control, including state energy policies that closed fossil-fuel fired power plants prematurely and data center growth in “Data Center Alley” in Northern Virginia and other burgeoning hubs in the Mid-Atlantic.
“Prices will remain high as long as demand growth is outstripping supply – this is a basic economic policy,” said PJM spokesman Jeffrey Shields. “Right now, we need every megawatt we can get.”
New projects totaling about 46 gigawatts – enough capacity to power 40 million homes – have been cleared in recent years, “but are not getting built because of local opposition, supply chain backups or financing issues that have nothing to do with PJM,” Shields said.
PJM has lost more than 5.6 net gigawatts in the last decade as power plants shut faster than new ones enter service, according to a PJM presentation filed with regulators this year. PJM added about 5 gigawatts of power-generating capacity in 2024, fewer than smaller grids in California and Texas.
Meanwhile, data center demand is surging. By 2030, PJM expects 32 gigawatts of increased demand on its system, with all but two of those gigawatts coming from data centers.
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