Proposal Wants Data Centers to Power PJM
Electricity demand is surging in PJM, and it’s all thanks to data centers. According to the EIA, in 2024 they used more electricity in PA than all the other sectors combined! And that usage is a big part of why both utility and electric supplier rates have risen sharply in the last year. Governors in the PJM service area are demanding reforms from the grid operator to help bring more power online.
And it seems to be working. PJM is reviewing a joint proposal between state governors and the DCC (Data Center Coillition). This proposal could help fast track data centers that provide their own electricity. It’s a move that could help stabilize electricity rates across PJM.
Data Center Power Demand
Data center growth in PA is huge, with $90 billion worth expected to flow into PA in the next few years. However, along with it comes a power drain. Of the 32 gigawatts of new demand PJM expects to see by 2030, 30 GW of it will be from data centers. As a result of tightening energy supply, prices have spiked.
So, this proposal aims to address the issue. By fast tracking permits and connections for data centers that bring their own generation, the governors think their plan will secure more grid stability.
Joint Proposal with PJM and Data Centers
The joint proposal is built on five tenets. However, it all relies on both PJM to agreement and then to work with individual states.
- Firstly, large data centers must financially commit to supporting a power source that meets or exceeds their electricity demand. That means they can build a new power plant, expand or update an old one, or contract with one that didn’t clear a recent capacity auction.
- PJM and local utilities will then guarantee to speed up the interconnection process.
- State utility commissions will create their own approval processes to help speed permitting, environmental review, and project siting.
- PJM will design a program to help large generation projects cover the costs for the network upgrades that would fast track their interconnection.
- And finally, the proposal would extend the capacity auction price cap by another year.
Data Center Power Pitfalls
Certainly the proposal could help curb the spiking electricity rates. ERCOT, the Texas grid, is seeing a similar issue with data centers. Grid connection requests have nearly quadrupled in the last year alone due to data centers and AI. And in response, they’re reviewing a similar idea.
One unanswered question that remains is who will lose power in case of blackouts or grid interruptions. There’s no agreement in the joint proposal. And, while data centers can lose quite a bit of revenue when they lose power, the same could be said of other business. Not to mention the inconvenience and discomfort to consumers. Moving forward, this question could become an issue if the grid loses reliability.
PJM Price Uncertainty
Rising energy demand has already caused utility Price to Compare rates to rise this winter. As lawmakers try to find an answer, it’s important to shop and save on your electric bills.
Locking in a low fixed rate electric plan now can save you money for years to come. So compare rates, read reviews, and more with us. Visit https://www.paenergyratings.com to see the electric plans in your area.