Data Center Power Supplies Imperiled by Crunch in Top US Grid
(Bloomberg) -- The biggest US power grid is warning that data centers may face involuntary outages under a plan to avert widespread blackouts and protect residential ratepayers from electricity price spikes.
Digital warehouses that fail to secure enough power generation to slake their needs may be temporarily dropped from the grid during high-demand periods as soon as mid-2027, PJM Interconnection LLC said in a letter to stakeholders Monday.
To soften the blow of such outages, data center operators could stand to receive compensation for the inconvenience and expense, according to the letter. The pronouncement comes as PJM and other US grid operators grapple with aging infrastructure and artificial intelligence’s insatiable power demand, known in the industry as “load.”
“The present trajectory of rapid load growth, tightening supply and rising capacity costs is not sustainable,” Paula Conboy, chair of PJM’s board of managers, wrote 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 curtailment warnings would be issued before the grid enters actual emergency scenarios, under the plan.
PJM, home to Northern Virginia’s Data Center Alley, has been under intense pressure to rapidly boost power generation to address a projected electricity shortage in coming years. The grid operator has faced months of criticism from governors, utilities, consumer-rights groups and the White House, prompting calls for reforms or even a breakup of the network.
PJM also announced an emergency auction for power generation in September to help plug a projected shortfall of almost seven gigawatts for the year beginning in June 2028. An auction earlier this month failed to attract sufficient supply for that period. The costs of the so-called Reliability Backstop Procurement will be allocated to data centers, according to the letter.
A bilateral matchmaking process for data centers and power generators will occur in parallel, PJM said.
PJM forecasts that demand from data centers will increase by around 70 gigawatts by 2038. Earlier this month, demand on the PJM grid surged to 168 gigawatts, smashing a two-decade old record as extreme heat added to the extra burden of new AI facilities.
“This unprecedented growth in demand, combined with the retirement of approximately 15 GW of generation in the PJM footprint since 2022, has placed increasing pressure on the region’s resource adequacy position,” the letter said. “The Board believes this reliability threat requires decisive action.”
US President Donald Trump and a bipartisan group of governors in January offered a blueprint to PJM that proposed the grid operator conduct a one-time electricity auction in which technology companies would effectively pay for new power plants by bidding on 15-year contracts.
PJM also will develop a new registry to keep track of data centers and the power they need as part of an effort to improve future projections.
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