Data Centers A Focus for Grid Operator

The regional electric grid operator is fast-tracking development of a plan to standardize how new data centers and other large-load customers connect while placing the “utmost importance” on ensuring there is enough reliable power for other customers.

A recent letter to PJM Interconnection stakeholders indicates there is a growing consensus that finding solutions to ensure there is enough power supply to provide service to all customers should be a high priority. The grid operator plans to use the Critical Issue Fast Path initiative to develop a proposal to submit to the Federal Energy Regulatory Commission (FERC) by the end of the year. PJM serves some 64 million customers in the Mid-Atlantic region, including Pennsylvania.

The PJM letter notes that its 13-state region continues to see an increase in large load additions, mainly from data centers, which is straining the grid’s resources and tightening supply-demand conditions. “Indeed, PJM’s 2025 long-term load forecast shows a peak load growth of 32 gigawatts (GW) from 2024 to 2030. Of this, approximately 30 GW is projects to be from data centers,” it states. A 2024 capacity auction for wholesale electricity resulted in a more than 800% increase in the price PJM paid, and contributed to an increase in residential power bills.

“This onrush of demand has created significant upward pricing pressure and has raised future resource adequacy concerns,” the letter from the PJM board said. “To further complicate matters, while demand expansion is clearly evident in recent system behavior, there exists a large cone of uncertainty around the trajectory and amplitude of future growth.”

PJM has been warning for several years about the tightening supply-demand balance, as power demand is rising while at the same time, fossil-fuel generation plants have been retiring and new generation sources are not coming online fast enough. PJM is reforming its interconnection processes, which has resulted in the approval of 140,000 megawatts (MW) of planned generation, with 46,000 MW of that ready to construct.

A recent one-time initiative approved a number of projects that are expected to bring additional generation online by 2030, but more is likely to be needed.

The fast-track effort to address the addition of large loads, such as data center that require massive amounts of energy, will focus on four issues: resource adequacy; reliability criteria; interconnection rules; and coordination.

PJM wants to develop rules to ensure large loads can continue to be added to the grid without affecting residential or commercial customers. It wants those involved in the process to consider existing tools to ensure adequacy, such as demand response, which is when certain customers cut back on electric use during periods of peak demand. Data centers require consistent 24/7 power to operate, so it is uncertain how they would be involved in demand response. The planning process will also examine allowing data centers to supply their own electricity by building their own generation supplies.

PJM hopes to develop the submitted plan to FERC by the end of 2025, so that it can be in place before the next capacity auction for wholesale electricity in June 2026.