Key facts
- PJM Interconnection may cut power to data centers lacking independent sources during demand events.
- The plan aims to prevent blackouts and protect residential customers from rate spikes.
- The measure could be implemented across 13 states by mid-2027.
- PJM faces a significant power shortage in the year following June 2028.
- Data center demand has driven power supply costs up by over 60%.
- Residential electricity bills are projected to increase by $70 monthly by early 2028.
The nation's largest grid operator, PJM Interconnection, has warned that data centers without an independent power source may face temporary outages during periods of unmanageable demand. This measure is intended to prevent widespread blackouts and shield residential customers from significant rate increases.
PJM's plan, detailed in a letter to stakeholders, could be implemented as early as mid-2027 across its 13-state service territory. PJM Board of Managers Chair Paula Conboy stated that the current trajectory of rapid load growth, tightening supply, and rising capacity costs is unsustainable, emphasizing that existing consumers should not bear higher costs due to new large loads that do not secure their own necessary supply.
The update follows PJM's announcement of an emergency auction scheduled for September to secure additional power, as the operator anticipates a nearly 7-gigawatt shortage in the year following June 2028. Data center operators are expected to bear the costs of this 'reliability backstop procurement'. Earlier this month, PJM closed a record $16.4 billion auction for new power sources, yet this was insufficient to meet projected demand and ensure grid reliability.
Increased demand from data centers has driven power supply costs up by over 60%, according to Monitoring Analytics. PJM anticipates needing to raise $30 billion from its customers to maintain operations, with residential bills projected to rise by approximately $70 per month by early 2028. The rapid growth of the data center industry has drawn scrutiny from lawmakers and consumer advocates.
Pennsylvania, a state with significant data center activity, has seen its governor, Josh Shapiro, suggest that hyperscalers should be required to 'bring their own power' to qualify for incentives. In February, Shapiro and 18 other governors signed a letter from President Donald Trump urging PJM to conduct an emergency auction funded by technology companies to identify more power sources.