Data Center Power Demand Expected to Add Billions in Costs Across Maryland and 12 Other States

Electricity demand from rapidly expanding data centers is projected to add approximately $6.3 billion to wholesale power costs across the PJM Interconnection's territory, which includes Maryland, 12 other states, and the District of Columbia. An analysis by Monitoring Analytics, PJM's independent market monitor, attributed this significant cost increase to existing and projected data center electricity demand, with the total cumulative effect approaching $30 billion across several recent auctions.

PJM, which manages the nation's largest regional electric grid, announced that its latest capacity auction secured 138,318 megawatts for the 2028-2029 delivery year, clearing at a federally approved maximum price of $325 per megawatt-day. Despite this, PJM fell 6,831 megawatts short of its one-event-in-10-years reliability standard, marking the second consecutive auction with such a shortfall. PJM President and CEO David Mills noted that demand is growing faster than supply, impacting system reliability and consumer costs. He emphasized that the issue is not just high consumption but the speed at which data centers are planned and connected, outpacing new generation facilities.

Maryland Governor Wes Moore's administration highlighted that the price cap prevented an estimated $13.3 billion in higher auction costs for customers across the PJM region. Governor Moore has actively pushed for reforms, including joining a coalition of governors and addressing PJM executives directly regarding rising energy costs linked to data center growth. The Maryland General Assembly has passed and Governor Moore has signed the Utility RELIEF Act, aimed at lowering residential electric and gas bills and implementing reforms to protect ratepayers from data center impacts. The Maryland Energy Administration continues to implement these measures and pursue other initiatives like incentivizing new generation and modernizing the grid.

PJM is also pursuing its own measures to address the supply-demand imbalance, including a "Connect and Manage" proposal allowing large customers like data centers to connect while agreeing to reduce electricity use during peak stress, developing a backstop procurement program, and accelerating approvals for power projects. The organization is also facilitating long-term agreements between large electricity users and power producers, potentially requiring data centers to directly support new power plants rather than relying on costs spread across all customers. PJM's next capacity auction is scheduled for December, which will further indicate the pace of new generating resources compared to data center expansion.