Major US power operator says AI and data center demands are pushing prices up
PJM Interconnection (PJM) is the largest power grid operator in the US, serving 65 million customers across the District of Columbia and 13 states, namely Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia and West Virginia. But this summer, some parts of PJM’s power grid are expected to use so much electricity that people’s bills for the summer are projected to be 20 percent higher than before, according to Reuters.
The operator said its problems with supply and demand are beyond its control. To start with, some state energy policies caused the closure of fossil-fuel fired power plants before new ones could become operational. “Prices will remain high as long as demand growth is outstripping supply — this is a basic economic policy,” PJM spokesperson Jeffrey Shields told Reuters.
Of course, wind and solar projects are likely the cheapest way to add power generation capacity to the grid, but the Trump administration’s Big, Beautiful Bill kills off a lot of incentives for solar power. Renewable energy projects also require engineering studies before they could be connected to the grid. PJM decided to stop accepting new applications for power plant connections in 2022 since it still has 2,000 requests from renewable sources to process.
In addition to PJM losing power sources due to plants closing down over the years, there’s a surge in demand from data centers over the past few years. The region PJM serves has the most number of data centers in the world. Demand for power also exploded in 2023 when ChatGPT started becoming a household name, contributing greatly to the spike in prices. PJM has capped its prices for now and has fast-tracked the connection of 51 power plants to its grid, but a lot of those aren’t slated to come online until 2030.
