PJM Interconnection to curtail large data center loads on U.S. grid from 2027

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PJM to limit data center loads

Highlights

PJM Interconnection will begin curtailing power to data centers of 50 megawatts or more during shortages starting June 2027, following a capacity auction shortfall.
Data centers are projected to use four times more electricity by 2035, likely driving increased reliance on costlier, more polluting on-site diesel generators.
Wholesale electricity prices in PJM territory have nearly doubled over the past year, with PJM's market monitor attributing much of the rise to soaring data center demand.

Capacity shortfall drives curtailment plan

As first reported by TechCrunch, PJM Interconnection says it will cut power to data centers and other large users during power shortages after an auction for additional generating capacity falls short. The grid operator says the curtailments will not begin until June 2027 and will apply only to data centers that are 50 megawatts or larger.

The approach mirrors longstanding demand response programs used for major industrial customers, including manufacturers. Customers whose electricity is interrupted are compensated, and advance notice can range from 30 minutes to several days depending on expected demand conditions.

PJM is also running another auction for new generating capacity as grid operators face mounting pressure from the rapid expansion of data center construction. Data centers are expected to use four times more electricity by 2035 than they do today.

Cost and pollution concerns grow

The change is likely to push many new, and potentially some existing, data centers to secure on-site power sources. Operators that do not add dedicated supply are likely to rely more heavily on backup generators, which are typically more expensive to run and often more polluting.

Many data centers favor diesel generators because the fuel is widely available and can be stored on-site. Federal rules allow those generators to run for up to 50 hours per year for demand response events, and up to 100 hours annually when emergencies and maintenance are included.

The policy lands amid broader scrutiny of data center power demand in PJM's territory, which stretches from Virginia to Illinois and serves 67 million customers. Wholesale electricity prices have nearly doubled over the past year, and PJM's independent market monitor blames data centers for much of that increase.

This week, Vantage Data Centers also comes under criticism over its apparent coordination with Virginia environmental regulators to cast doubt on a report saying diesel backup generators could cause tens of millions of dollars in annual health damage for residents living near a 96 megawatt data center in Northern Virginia.

Ontario’s Etobicoke Greenway transmission project highlights how grid operators are adding capacity and boosting reliability as electricity demand rises. Our earlier article explained that the new 230-kilovolt line can deliver up to 300 megawatts to parts of the Greater Toronto Area and is part of a broader buildout plan, including the proposed Toronto Third Line, as regional demand is forecast to keep climbing.

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