The Mid-Atlantic's electric grid operator is taking steps to rein in data center demand
PJM Interconnection, the Mid-Atlantic's electric grid operator, is proposing new rules to curb the increasing demand for electricity from data centers. These changes, which require federal approval, aim to address soaring costs and supply shortages by requiring data centers to secure their own power or risk service interruptions. State governments will be crucial in implementing these policies and allocating costs to data centers.
PJM Interconnection, the organization managing the electric grid across 13 states and Washington, D.C., has announced plans to mitigate the significant impact of data centers on electricity costs and supply. Facing sustained pressure due to rapid load growth and tightening supply, PJM is seeking approval from federal regulators to implement substantial changes, including forcing data centers to either supply their own power or face potential service cut-offs during peak demand.
The proposals, developed over 18 months with input from state governments and the White House, include creating a secondary capacity auction specifically for data centers. This would require data centers to procure energy to cover a projected 6-gigawatt regional shortfall, ensuring they "pay their fair share" for the new power plants needed to serve them. Additionally, new "large load" customers would be excluded from the larger capacity auction unless they demonstrate self-sufficiency in power generation, such as through on-site solar, battery storage, or power purchase agreements.
PJM is asking the Federal Energy Regulatory Commission (FERC) to approve these proposals within two months. While PJM sets the auction rules, the allocation of costs to individual data centers will largely depend on state action. For instance, in Virginia, the State Corporation Commission (SCC) would be responsible for ensuring that costs are appropriately charged to data centers. The SCC recently directed Dominion Energy to develop a policy for charging data centers for related transmission infrastructure costs. PJM also plans to develop a database to track data center locations and energy usage to assist state officials.
Advocates like Claire Lang-Ree of the Natural Resources Defense Council view these actions as beneficial for consumers, though power bill relief is not expected before 2030 due to the advance nature of PJM's auctions.