Largest U.S. Grid Operator Scrambles For Power, Warns Of Data Center Outages

The nation's largest grid operator warned that it could temporarily cut off data centers without an independent source of power in an unmanageable demand event.

PJM Interconnection's plan, shared in a letter to stakeholders on Monday, aims to prevent blackouts and protect residential customers from rate spikes, Bloomberg reported. PJM could implement it as soon as mid-2027 across the system spanning 13 states from Ohio to Virginia and Washington, D.C.

“The present trajectory of rapid load growth, tightening supply and rising capacity costs is not sustainable,” PJM Board of Managers Chair Paula Conboy said in the letter.

“Existing consumers should not bear higher capacity costs caused by new Large Loads that do not bring, or otherwise contract for, the new supply necessary to serve them.”

Data center operators will be notified ahead of time if the utility moves to enact the emergency measure. They may also be eligible for compensation in light of the expense and inconvenience.

The update came after PJM announced an emergency auction scheduled for September that is meant to procure power as the utility stares down a nearly 7-gigawatt shortage in the year following June 2028. Data center operators will field the cost of what it calls the reliability backstop procurement, the letter says.

PJM closed a record $16.4B auction for new power sources earlier this month, but it still wasn’t enough to meet upcoming demand and ensure grid reliability.

The utility provider's power supply costs have risen by more than 60% amid increased demand from data centers, independent market monitor Monitoring Analytics reported earlier this month. That means PJM will need to raise $30B from its customers to keep the lights on. Residential bills are projected to rise by $70 per month by early 2028.

The organization has faced increased scrutiny from lawmakers and consumer advocates as data centers have become a political football.

PJM serves Virginia, which includes the largest hub of data centers worldwide in the Washington suburbs, and Pennsylvania, where the industry’s rapid growth has faced intense resident backlash.

In February, Pennsylvania Gov. Josh Shapiro, who has been supportive of data center construction, said during a budget address that hyperscalers should be required to “bring their own power” to qualify for expedited permitting and state tax incentives.

A month earlier, Shapiro and 18 other governors signed a letter from President Donald Trump urging PJM to hold an emergency auction to identify more power sources that would be paid for by technology companies.