US Power Grid Operator Warned of Energy Crisis Fueled by Data Center Demand

America's largest power grid, PJM Interconnection, was alerted to an escalating energy crisis exacerbated by the rapid growth of data centers, a situation now threatening power outages in 13 states. The U.S. Department of Energy declared an emergency, temporarily easing pollution regulations in an effort to maintain electricity supply for millions.

PJM Interconnection, which serves 67 million people across Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia, and Washington D.C., has been confronting a significant increase in electricity demand from data centers. The grid operator projects this demand will triple by 2030, reaching approximately 29 gigawatts within its Midwest and Mid-Atlantic territory.

This surge in demand collides with years of declining net electricity supplies in the region. This imbalance has led to a more than 1,000 percent increase in capacity costs since 2024 and a 6.8 gigawatt shortfall, creating a risk of blackouts. A study commissioned by the Pennsylvania Public Utility Commission suggests that by 2030, PJM could experience a "loss of load expectation"—when demand exceeds generation capacity—between six and 100 times worse than initially planned, unless new data centers are not added.

Pennsylvania Public Utility Commission Chairman Steve DeFrank warned that the current trajectory is unsustainable and urged immediate action from the power supplier. Joseph Bowring, president of Monitoring Analytics, the grid operator's independent market monitor, echoed these concerns, stating that PJM's current approach overlooks a significant paradigm shift in energy demand, potentially imposing costs on existing customers.

In response to the escalating demand, PJM Interconnection proposed a plan to the Federal Energy Regulatory Commission (FERC) that would allow it to curtail power to new, large data center customers during energy shortages to prevent blackouts. However, FERC rejected this proposal, ruling that such matters fall under state jurisdiction. The commission did approve PJM's plan to build a database of data centers to better track energy usage, in-service dates, power ramping schedules, backup generation, fuel sources, and locations.

PJM spokesman Jeff Shields indicated the grid operator is reviewing FERC's order to comply with its requirements while respecting state responsibilities and ensuring existing customers are not unfairly burdened by new, energy-intensive users. "Existing electricity customers should not be unfairly burdened by new, energy-intensive customers in the form of higher costs or decreased reliability," he stated.

To address the growing energy needs, Google and Constellation Energy announced a partnership to bring 890 megawatts of new nuclear capacity to the PJM grid, aiming for the first upgrade by 2028. "This long-term clean energy collaboration with Google can serve as a model for how technology companies and the energy industry can work together to responsibly develop the digital economy and invest in our nation's energy infrastructure in a way that delivers grid-wide benefits for all, funded by private entities," said Joe Dominguez, president and CEO of Constellation.

In the interim, the Department of Energy issued a short-term emergency order, effective from Tuesday through Friday, allowing PJM Interconnection to exceed normal pollution limits. This measure is a response to a sudden, unseasonably warm weather pattern expected to drive temperatures into the 70s and 80s across the PJM service area, increasing demand for air conditioning. Energy Secretary Chris Wright stated the order aims to prevent widespread blackouts and ensure reliable electricity, while also criticizing policies he believes have weakened the grid by prioritizing intermittent energy sources over fossil fuels.

Energy Secretary Wright also blamed the Biden Administration's energy policies for weakening the nation's electrical grid and making it more vulnerable to outages. "While past leaders’ energy subtraction policies have made the grid more vulnerable to the risk of blackouts when the sun doesn’t shine or the wind doesn’t blow, this administration remains committed to using every available tool to prevent blackouts," he said. Officials had previously feared that the surge in power demand, coupled with seasonal repairs to power plants and transmission lines, could overtax PJM's grid.