Benjamin Roberts
Associate Editor
The largest U.S. grid operator proposed cutting power to newcomers during periods of high demand in a Wednesday white paper.
PJM Interconnection serves over 67 million consumers across its operational area. Its infrastructure is now strained by data center expansion and disruptive environmental policy, according to the operator’s “Powering Reliability Through Market Design” document. (RELATED: Voters Oust Half Of Missouri City Council For Greenlighting $6 Billion AI Data Center)
“Unprecedented surge in demand driven by the rapid expansion of large-load data centers and broader economy-wide electrification,” is noted by PJM as one of the the three drivers of grid strain, alongside “the accelerated retirement of dispatchable generation due to environmental policy and economics; and significant supply chain and permitting frictions that have extended the time required to bring new resources online.”
Data centers are the primary drivers of rising electricity consumption, according to the U.S. Energy Information Administration (EIA). The EIA expects electricity demand to grow by 1% in 2026 and 3% in 2023, potentially outpacing new energy supply.
“The result is a transition from an era of managing surplus to an era of managing scarcity,” the memo continues, highlighting long lead times on new energy developments. “Construction timelines have doubled,” the report continues. “Today, a new natural gas turbine plant – the reference technology for the capacity market – requires at least four years under optimistic assumptions from financial investment decision to commercial operation.”
Permitting requirements contribute considerably to long development times. The average environmental review takes over four years to complete, according to the Council on Environmental Quality.
PJM’s white paper highlights three paths toward keeping the grid solvent.
Path A aims to stabilize markets “through long-term forward commitments either through mandatory Load Serving Entity (LSE) hedging requirements or through a PJM-administered, long-term procurement, such as a tiered, multiyear capacity market.”
LSE is a catchall term for any authorized seller of electricity to its principal users.
Alternatively, PJM’s Path B institutes differential reliability.
“This could be implemented geographically (different states or zones procuring different levels of reliability) or by customer class (for example, with residential and native loads insulated from curtailment while unbacked new large load additions are curtailed first),” the memo notes.
Under the differential reliability model, data centers using preexisting supply would be subject to throttling during periods of high demand. Residential consumers who contributed to existing supply would be prioritized for output.
Path C aims to partially transition grid use to a supply-and-demand pricing model, while maintaining long-term contract optionality. PJM would “pursue a deliberate, phased shift of revenue recovery from the capacity market” combined with “long-term forward energy contracting requirements to protect consumers from increased energy price volatility and to support investment.”
“Constrained supply” is at the heart of PJM’s complaints. This shortage largely stems from the many regulatory reviews required to break ground on energy developments, according to the Consumer Energy Alliance.
The Trump administration has employed statutory actions to cut regulation and expedite permitting, notably overturning the Obama-era endangerment finding that allowed for federal regulation of carbon emissions.
These actions have not been made law by Congress. Though the House of Representatives passed the Standardizing Permitting and Expediting Economic Development Act in December 2025 to modify the National Environmental Policy Act, the legislation is frozen in the Senate.
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John Thune is a disappointment, nearly as bad as Mitch McConnell.
John Thune is a McConnell protege and was his hand-picked successor as Majority Leader.
If Republicans lose control of the Congress in the mid-terms, the refusal of Senate Republicans to support the SAVE Act and other important America First legislation will be one of the major factors in that defeat.
John Thune does not have the Senate Republican votes to do what you want him to do.
There are three or four Senate Republicans who will not vote to kill the filibuster. So what is Thune to do?
Your ire should be directed at the Republican Senators who side with the Democrats and enable Democrat attacks on the U.S. Constitution.
No, Thune is, and has been, the problem. Just as his transdaddy McConnell was the problem before him. Those RINOs would not be doing what they are without Thune’s direct order to do it.
It’s not Thune’s fault he can’t corral 8 Dems to vote for permit reform. He’s got to reach across the aisle if we’re going to get a decent reform bill.
As for those who are urging the Republicans to get rid of the filibuster, I hope you’re unsuccessful. If it weren’t for that, and a couple of brave Dem senators, we’d have 52 states (add Puerto Rico and D.C.) and 13 members of the Supreme Court with a liberal majority.
The day will come, maybe soon, when we’ll have a Democratic Congress and President. Then we will all be glad for the filibuster, and hoping that we have a few brave Democrat senators once again.
Democrats will flush filibuster the very instant they have the majority. Period. Full stop. And Thune is a backstabbing piece of shit and always has been.
If data centers are consuming most of the electrical power, leaving little for the average home, doesn’t that mean there will be less demand for data centers since people wont have the electrical power to get on-line?
It takes a while for your phone to go flat.
I sometimes wonder how much power is consumed delivering video on demand instead of broadcast TV. How long before the on-demand usage is rationed to allow government consumption?
A single AI focused chip in a modern data centre can use 1 kW of power …a single chip of which they may have 1000s plus all the ancillaries
A phone or desktop chip is likely only occasionally running at its 65 W power draw
Which chip uses 1kW ?
Nvidia’s upcoming Blackwell architecture GPUs, codenamed B100 and B200, are expected to deliver up to 1 kW per GPU under load.
Any reasonable power supply authority should know by now if 2023 demand was higher or lower. Australia has smart meters that enable usage to be measured as it occurs rather than waiting for meter readings to come in
They do. Thats why a large consumer has to get pre approval before they even start construction that the local lines etc can carry the power consumption. The data centre will also get a contract aheda of time for its power needs so that it can understand the costs.
Could be years in some instances before the power can be supplied at the right quantity and price.
Some are building the infrastructure any way , as the chips are the costly part and might be bought later for installation when theres a business going to use the processing output
Data centers can be built much faster than grid and generation infrastructure. The largest players know this and are building their own generation capacity. There are currently forty-six such projects that plan to generate a total of fifty-six gigawatts.
IMHO, if the worst happens, the data centers might outbid the utilities for access to constrained supplies of power generation equipment. We will see what develops.
Are you implying some kind of impending apocalypse?
How much natural gas will be needed to generate that 56 gigawatts? When the gas supplies run low, who gets cut off, datacenters or the retail customers?
You mean in a couple hundred years?
I think we have to be careful about blaming Data Centers for raising electricity costs.
The people who promote windmills and solar would love to shift the blame from themselves to Data Centers.
There are three Data Centers going up in my area and they claim they will not raise local electricity rates.
What is “drastic” about building more gas, hydro and nuclear electric generation plants? Nothing. The “drastic” part is ripping out failed win and solar. Americans voted overwhelmingly for “drastic”, now get it the f*ck done.
It is also drastic to shut down perfectly good, clean, and efficient coal and nuclear plants.
This has been a coming crisis for over thirty years.
The blame is on Democrats(mostly) that needed to serve the “population problem” and “the USA economy too big problem”!
Then the regulators and Democrats (mostly) added massive unnecessary regulations, mandated “green”,parasitic, sporadic, unavailable ,costly, resource , that created leftists’ jobs, cancelled millions of blue collar jobs…add literally demolished reliable, dispatchable, availabile, low cost generators with lots of service life remaining!
Add more?
One absolute law (amendment?):
The grid reserve capacity shall never be less than 15-20% of highest forecast 10-year demand !!
Also advisable: All persons involved in making laws and regulations that reduce grid availability and/or reliability shall be held accountable and punished by fines and imprisonment.
There is no reason for data centers to use grid power. They should run their own turbogenerators as backup power anyways. These can be natural gas, diesel, or jet fuel.
The number 1 reason for grid problems is FIT. Feed In Tarrifs that preferentially buy Green Power. This drives reliable power out of business. Until there is a level playing field shortages will increase.
Yes, windmills and solar are the problem.
The genius Democrats in the Maryland government (who are responsible for shutting down most of the coal-fired plants in the state) still think a big offshore wind farm is going to save them. Of course new transmissions lines are needed to get the power into Maryland, but at the same time they are siding with the NIMBYs who are fighting new transmission lines. Maryland is big trouble.