Key facts
- PJM Interconnection issued a maximum generation alert due to extreme heat and soaring demand.
- Electricity demand on PJM reached nearly 163 gigawatts, close to its all-time record.
- Day-ahead power prices surged to over $2,000/MWh in some areas.
- The U.S. Department of Energy authorized PJM to allow power plants to exceed pollution limits and potentially switch data centers to backup power.
- Data centers are projected to account for the vast majority of PJM's peak demand growth through 2030.
- PJM's capacity market prices have risen significantly due to data center demand.
America's largest power grid, PJM Interconnection, is facing unprecedented strain due to a severe heat wave, pushing electricity demand to near-record levels. On Thursday, demand reached approximately 163 gigawatts, falling just short of the grid's 2006 peak. The U.S. Department of Energy intervened with an emergency order, allowing power plants to exceed pollution limits and potentially directing large data centers to switch to backup generators to free up capacity for homes and hospitals.
Day-ahead power prices in parts of the PJM system, which serves 67 million people across 13 states and Washington D.C., surged to over $2,000 per megawatt-hour, nearly triple the price from a comparable period last summer. PJM's operating reserves have significantly decreased, leaving little buffer for unexpected plant outages.
Data centers are identified as a major driver of future demand growth. PJM projects peak demand will increase by 32 gigawatts between 2024 and 2030, with data centers accounting for all but 2 gigawatts of that rise. This escalating demand has already driven PJM's capacity market prices to a record high, with independent monitors attributing a significant portion of this increase to data center consumption, resulting in substantial costs for ratepayers.
Utilities have urged customers to conserve energy by raising thermostats and limiting the use of appliances. Despite the grid holding steady and avoiding rolling blackouts, the record demand is forecast to be broken soon.