Pa. Could Face Power Shortages Due to Data Center Growth

Rapid data center growth could cause serious electric reliability risks across Pennsylvania and the Mid-Atlantic region and lead to blackouts, a recent state report warns.

The Public Utility Commission released an independent analysis conducted by national consulting firm Synapse Energy Economics that found that the reliability risk by 2030 is nearly six times worse than what regional electric grid operator PJM is forecasting using current load predictions. If demand grows faster than predicted, the results are even worse, with electric customers experiencing more than 13 potential electric interruptions each year starting in 2030. PJM’s longstanding reliability standard is designed to limit shortages to about one event every 10 years.

The dire situation is due to rapid growth in electric demand, largely due to data center development, at the same time as aging power plants retire and construction of new generation is constrained. These factors are causing high electricity prices and looming reliability concerns.

“Pennsylvania is at an energy crossroads,” said PUC Chairman Steve DeFrank. “Data center development brings significant opportunities, but that growth cannot come at the expense of the families and businesses that already depend on reliable and affordable electric service.”

DeFrank said the warning is clear: electricity demand and supply are moving out of balance. PJM, policymakers, regulators, utilities, and other stakeholders need to work urgently on a comprehensive approach to bring new generation online, preserve reliability, and protect ratepayers, he warned.

“Time matters,” DeFrank said. “The changes highlighted in this report are not decades away. The reliability pressures emerge during the next several years, and the decisions being made now will determine how prepared we are to meet them.”

Data centers have become a political football, and Gov. Josh Shapiro has announced a set of GRID standards for responsible development, tried to ensure local control over projects, and pushed PJM to rapidly update its interconnection rules to address the demand issue, while securing a price cap on the cost of wholesale energy.

The PUC has also established a model large-load tariff to ensure that customers needing 50 megawatts or more of electricity to bear the costs they add to the electric grid, so that ratepayers do not see more increases in their bills. It also adopted a motion that existing customers must be protected during shortages ahead of newly connecting data centers.

The study also found that under all the scenarios modeled, Pennsylvania’s share of regional generating capacity shrinks over time, as other states with large projected data center loads or less expensive resources increase the amount of energy they are generating.

Pennsylvania is currently the largest energy exporter in the PJM regional grid. While that status is maintained in the reference case modeled on current projections, in the more severe high-demand scenario, the state becomes a net energy importer by the late 2030s.