Large US Grid Lacks Capacity for New Data Centers, Watchdog Says

(Bloomberg) -- The biggest US grid has no spare supply for new data centers, meaning project developers will need to build their own power plants, according to the system’s independent watchdog.

“There is simply no new capacity to meet new loads,” said Joe Bowring, president of Monitoring Analytics, which is the independent watchdog for PJM Interconnection, the grid that extends from Washington to Chicago. “The solution is to make sure that people who want to build data centers are serious enough about it to bring their own generation.”

Artificial intelligence is driving the biggest US surge in electric demand in several decades, adding stress to grids that have proven vulnerable to extreme weather. PJM, which is home to the highest domestic concentration of data centers, has endured such tension for more than a year.

Tight supplies on PJM led to a record $14.7 billion in an annual auction last year. (The auction provides a key revenue source for generators within the system.) The results of the next auction, which are scheduled to be released late Tuesday, are expected to show capacity prices match or exceed all-time highs as the growth of data centers, especially for artificial intelligence, accelerates, according to Barclays Plc. 

At Infocast’s PowerUp Data Centers conference in Northern Virginia on Monday, Bowring said PJM should set up an expedited review process if data centers bring new generation so they can be connected to the grid quickly as long as they are reasonably matched in size. This would help solve a significant uncertainty in PJM’s long-term demand forecast because it would filter projects and reduce years’ long reviews for grid connections by matching supply and demand from the start, he added.

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