PJM (Pennsylvania-New Jersey-Maryland) Interconnection, America's largest power grid operator, is grappling with an unprecedented strain on its system.
The 2025 summer season could see electricity bills in the 13 states it serves, ranging from Illinois to New Jersey, soar by more than 20%, as reported by Reuters.
This comes as the region, which contains the most concentrated cluster of data centres in the US, experiences a surge in energy consumption that outpaces new plant construction.
The turmoil within PJM has escalated in 2024/25 following a more than 800% price increase at its annual capacity auction - a cost that ultimately impacts consumer electricity rates.
With the recent auction, there are concerns that prices may climb further. The auctions are critical for ensuring adequate power supply during peak demand periods and should ideally encourage new plant development.
However, such growth has been slow in PJM's territory due to delays in auctions and pauses in processing applications for new plants.
Pennsylvania Governor Josh Shapiro stated: “We need speed from PJM, we need transparency from PJM and we need to keep consumer costs down with PJM. I think they've taken some steps in that direction which is really encouraging to me, and we're going to continue to work at it.”
PJM attributes the supply and demand challenges primarily to external factors beyond its control.
These include state energy policies that have led to the premature closure of fossil-fuel power plants, as well as the rapid expansion of data centres in "data center alley" in Northern Virginia and other emerging hubs throughout the Mid-Atlantic region.
In the decade since 2016, more than 5.6 net gigawatts of generating capacity have been lost within PJM's network as older plants shut down without sufficient replacements coming online.
In contrast, only around 5GW have been added in 2024/25, a figure lower than the additions made by smaller grids such as those in California and Texas. Compounding this issue is an expected increase in demand of 32GW by 2030 due to data centre requirements.
PJM spokesman Jeffrey Shields was quoted by Reuters: “Prices will remain high as long as demand growth is outstripping supply – this is a basic economic policy. Right now, we need every megawatt we can get. New projects totalling about 46GW – enough capacity to power 40 million homes – have been cleared in recent years, “but are not getting built because of local opposition, supply chain backups or financing issues that have nothing to do with PJM.”
In 2022, PJM halted the processing of new applications for power plant connections due to being overwhelmed by more than 2,000 requests from renewable energy projects. Each request necessitated engineering studies before the projects could be connected to the grid.
