Blackout Fears Arise As Trump's Data Center Push Hits Already Strained Grid

A wave of artificial intelligence data center development is raising concerns about an electricity reliability crisis for the nation's largest power grid. 

President Donald Trump and key players from the energy and data center industries gathered in Pittsburgh last week to announce more than $90B of new AI data center development in Pennsylvania and across the mid-Atlantic.

But as the administration touts this surge of planned data centers, industry experts question whether the power grid serving this region can handle the tsunami of new development headed its way without significantly increasing the risk of blackouts.

PJM Interconnection, the country's largest grid operator, has a transmission system spanning 13 states in the mid-Atlantic and Midwest that encompasses data center hubs like Northern Virginia and Chicago. PJM has struggled to balance skyrocketing data center demand with its grid’s transition toward clean energy, and alarm bells are ringing from both sides of the political spectrum — and from clean energy advocates and fossil fuel executives — that the grid may be heading for a crisis.

Last week, the governors of nine states within PJM’s footprint wrote a letter to PJM’s board criticizing the grid operator and threatening to withdraw from the PJM system.

“Today, as our regional grid confronts intertwined reliability and affordability crises, PJM itself faces an unprecedented crisis of confidence from market participants, consumers, and the states,” said the letter, signed by the governors of Delaware, Illinois, Kentucky, Maryland, Michigan, New Jersey, Pennsylvania, Tennessee and Virginia.

“In the past, other regions looked to join PJM due to its many strengths; today, across the region, discussions of leaving PJM are becoming increasingly common.”

PJM responded to the governors with its own letter Friday. And it responded to a series of Bisnow questions, stating that it has been warning of these issues for two years, blaming them in part on "unprecedented demand” caused by data centers, and to a lesser extent, electric cars and building systems. 

“We have testified about our concerns before state Legislatures, Congress and FERC,” a PJM spokesperson said in written responses to Bisnow. “We have been at the forefront of the call for reforms while working with our stakeholders on multiple reforms in our Markets, Planning and Operations.”

Soaring electricity demand, largely from data centers, has already pushed the PJM grid to its limit.

The system narrowly avoided cascading blackouts on at least one occasion last year, while the Federal Energy Regulatory Commission chairman stated last month that PJM and other grid systems “really came close to the edge” during a recent heatwave. 

Avoiding a full-fledged reliability crisis will require significant reforms to how PJM and other regional grid organizations evaluate reliability, approve new sources of power generation and structure agreements with “large load” electricity consumers like data centers, according to experts from across the data center and energy sectors.

They say these fundamental reforms will only occur through decisive action from federal transmission regulator FERC, but there are fears the commission is stuck in neutral at a critical moment and may not be up to steering solutions to the massive problem.

“Right now, with the spike in data center demand, this is a brave new world for FERC, it’s a brave new world for the utility industry, and they’re trying to figure this out,” said Steven Shparber, an energy and sustainability attorney at Mintz who previously served as in-house counsel at PJM.  “They are, quite candidly, in a bit over their heads.” 

FERC didn't respond to Bisnow's request for comment. 

PJM’s service area is already home to the country's highest concentration of data centers, and many more are on their way. PJM projects that the maximum demand on the system will climb by an average of 3.8% annually through 2035, with summer peak demand increasing by nearly 70 gigawatts within 15 years.

Like all regional transmission organizations in the U.S. energy landscape, PJM oversees a service territory within which many utilities provide electricity to customers. More than a thousand member utilities participate in PJM, including Dominion Energy, American Electric Power and Consolidated Edison. 

PJM operates the market in which those utilities buy power, and it is responsible for coordinating the flow of wholesale electricity and ensuring the reliability of the grid. This means ensuring that electricity supply and demand are balanced on the grid at any given time, as well as performing long-term “resource adequacy planning” to ensure the amount of generation connected to the grid is sufficient to meet even the highest demand scenario.

While they don’t own power plants or other assets, PJM and other operators completely control the approval process for adding new generation to the grid. They are responsible for studying each new generation resource in their “queue” to determine if it will negatively impact the U.S. grid. Extensive reliability modeling is conducted to ensure the grid can accommodate this additional generation safely.

But PJM's resource adequacy planning and generator interconnection processes are fundamentally broken, according to the Department of Energy and industry leaders who spoke with Bisnow.

This breakdown stems from surging data center demand, which caught utilities and grid operators off guard after decades of stagnant demand growth, and a rush of renewable energy projects seeking grid connections. As a result, PJM is struggling to bring enough new power generation online to meet projected data center demand and to accurately understand the behavior of supply and demand on its system to avoid catastrophic blackouts.

In a report this month, the Department of Energy highlighted PJM as a particularly acute example of an accelerating reliability problem across the U.S. grid, emphasizing the “urgent necessity of robust and rapid reforms” to how PJM and other RTOs operate. 

“Such reforms are crucial to powering enough data centers while safeguarding grid reliability and a low cost of living for all Americans,” the report stated. “Antiquated approaches to evaluating resource adequacy do not sufficiently account for the realities of planning and operating modern power grids.”

The inadequacy of PJM’s planning processes is perhaps most apparent in the backlog of more than 2,000 power generation projects in its interconnection queue.

With demand surging, the unprecedented influx of new generation proposals PJM experienced over the past four years might seem like a solution to the problem. But actual additions to the grid have been few and far between.

Projects have waited as long as seven years as PJM struggles to study and evaluate their grid impact, and many approved projects never materialize. 

The reasons why PJM is struggling to understand and evaluate the reliability implications of new generation projects are complex, with strained transmission infrastructure playing a key role. But challenges also arise because 90% of the new generation looking for interconnection is wind, solar and batteries. 

While traditional generation sources like coal and natural gas produce a steady amount of power on command, the energy output from wind and solar is far less predictable. Battery storage provides firm power but interacts with the grid differently from a comparable fossil fuel power plant. PJM has had to rethink its systems for studying new generation and assessing reliability, which weren’t designed around this more dynamic grid environment.

These challenges have been exacerbated by skyrocketing demand from data centers, which pose challenges for renewables due to their constant energy consumption.

“These data centers couldn’t come at a worse time,” Jon Gordon, director of renewables advocacy group Advanced Energy United, told reporters last week. “It’s a massive challenge.”

While renewable energy advocates frame the reliability concerns facing PJM as a problem of too many data centers, the Trump Administration and fossil fuel industry leaders blame policies promoting renewable energy. Still, there is widespread consensus that it is possible to serve rising data center demand and add renewables to the grid while avoiding blackouts. 

Whether this happens depends on grid operators’ willingness to change.

“We have the tools — hopefully we’ll use them,” Sarah Toth Kotwis, a carbon-free energy specialist at the Rocky Mountain Institute, said on a podcast last month.  

Both Kotwis and Shparber have expressed skepticism that PJM will embrace the fundamental reforms that would unlock solutions to the power challenges. They say PJM and its member utilities have been open to pursuing incremental revisions to their procedures but have shown little interest in the sweeping changes needed to navigate the evolving supply and demand landscape.

A similar criticism was levied against PJM by the nine governors in last week’s  letter, which characterized PJM’s response to reliability and capacity problems as “typified by halting, inconsistent steps.”

In its responses to Bisnow, PJM's spokesperson said it has made reforms and that these criticisms are “not fair, reasonable or based on evidence.”

“The supply and demand imbalance is a national issue driven primarily by the accelerating load growth and retirement of existing generators faster than new resources are being built for reasons outside of PJM’s queue, which has been successfully reformed,” the spokesperson said.

Ultimately, some experts say the push for interconnection reform may have to come from FERC, which regulates transmission planning.

Urgency from federal regulators is needed for these challenges that will only get worse, said Pete DiSanto, vice president of data centers at gas generation firm Enchanted Rock.

“FERC is where that needs to happen — if FERC is pushing those changes and the market reforms a bit, all of a sudden you get a whole lot of momentum and you’re going to have a whole lot more things built,” DiSanto said. “Everyone’s vacillating on how to figure it out, and meanwhile the load required just continues to go up while solar and wind continues to get built.”

But whether FERC will drive widespread RTO interconnection reforms remains unclear. Shparber said that FERC is in a similar position to PJM and other grid operators, scrambling to understand the problem at hand and engage with stakeholders on potential solutions. 

Adding to this uncertainty is the turnover underway at the federal regulator. FERC Chairman Mark Christie is expected to depart the commission later this summer and be replaced by Trump-nominated attorney Laura Swett. 

Along with the impact of new board members on policy decisions, the turnover itself potentially puts the regulator in a holding pattern amid a rapidly evolving power predicament.

“We’ll see what FERC does,” Shparber said. “Continued uncertainty at the FERC level in the short term is what we should expect.”