Largest U.S. Power Grid Struggles To Meet Demand from AI

America's largest power grid is under strain as data centers and AI chatbots consume electricity faster than new power plants can be built.

PJM is barreling toward its next capacity auction, where prices may rise even further. I Photo: PJM Interconnection LinkedIn 

Electricity bills are projected to surge by more than 20% this summer in some parts of PJM Interconnection’s territory, which spans 13 states—from Illinois to Tennessee, Virginia to New Jersey—and serves 67 million customers in the region with the highest concentration of data centers in the world, Laila Kearney wrote in an analysis for Reuters.

The governor of Pennsylvania is threatening to abandon the grid, the CEO has announced his departure, and both the chair of PJM’s board of managers and another board member were voted out.

The upheaval at PJM began a year ago after a more than 800% spike in prices at its annual capacity auction. These rising prices trickle down to everyday consumers’ power bills.

Now PJM is barreling toward its next capacity auction, where prices may rise even further.

The auction sets the price at which power generators agree to supply electricity during the most extreme periods of stress on the grid—typically the hottest and coldest days of the year.

While high auction prices are intended to incentivize new power plant construction, that hasn’t happened fast enough in PJM’s territory. Aging power plants continue to retire while demand from data centers explodes.

PJM has exacerbated the crisis by delaying auctions and pausing the application process for new plants, according to more than a dozen power developers, regulators, energy attorneys, and other experts interviewed by Reuters.