PJM Targets 15 Gigawatts of New Power for Data Center Boom
(Bloomberg) -- PJM Interconnection LLC is seeking 15 gigawatts of new power supplies in an emergency proposal to address potential electricity shortages stemming from the boom in artificial intelligence.
The operator of the 13-state eastern US grid would match proposed data centers with new power plants, PJM said on its website Friday. This process would take place from September through March 2027. Late next week, PJM will ask how many suitors on both sides are interested in participating in bilateral negotiations, along with terms such as contract duration.
Massive electricity consumption from data centers are transforming the global energy landscape. Power grids are at the epicenter of the shift, working to ensure tech companies have sufficient electricity while grappling with the pressures of limited supplies and extreme weather events.
PJM already is bracing for a multi-gigawatt supply shortage in the summer of 2027. The shortfall may reach 60 gigawatts over the next decade, which would equal the output of 60 big nuclear reactors.
Should the initiative — which may include resuscitating retired plants and upgrading existing facilities — fail to attract enough new supply, grid managers plan to pursue a second-phase process.
It’s unclear how much the new power supplies will cost but the pricetag for building natural gas-fired plants have more than doubled in the past five years.
PJM, along with federal and state lawmakers, has been seeking options to build power plants without raising utility bills for consumers. Investors have been expecting the grid operator to procure 15-year contracts for 10-to-13 gigawatts, Jefferies Financial Group Inc. analyst Julien Dumoulin-Smith wrote Thursday.
PJM’s initial proposal discussed contract durations that could vary from two to 15 years.
Details of the proposal will be reviewed next week before a final vote is held by PJM stakeholders in late May. The final plan will be submitted to the Federal Energy Regulatory Commission for approval in early June.
(Updates with additional details in the second, fifth and seventh paragraphs.)
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