PJM Interconnection, the biggest U.S. grid operator, proposed on Thursday a backstop plan with federal regulators to procure more power generation to avoid outages from the surging electricity needs of data centers.
PJM, which manages the electricity for 67 million people in a territory that stretches from Washington, D.C. to Chicago, filed the proposal with the U.S. Federal Energy Regulatory Commission, which would have to approve any moves by the grid operator.
The proposal highlights a growing tension between the rapid expansion of data centers and the ability of the nation's power grid to keep up. If PJM cannot close its supply gap, millions of residents and businesses face an increased of blackouts, and the cost of new generation could be passed on to consumers who have no connection to the data center industry.
At PJM’s recent capacity auction, power prices hit a price cap of $325 per megawatt-day. Despite the high prices that are meant to incentivize the construction of new power plants, PJM fell short by about 6.8 gigawatts of its reliability requirement to meet projected demand — a shortfall that raises the risk of grid blackouts.
PJM's proposed procurement plan, whose results it would disclose in December, would seek to close that gap.
Critics of PJM's proposal say the grid operator failed to attract the billions of dollars needed for new generating resources to meet the growing energy demand from data centers.
“PJM’s proposal to FERC seeks to fix problems created by states that voluntarily and knowingly made themselves dependent on PJM’s wholesale market to meet their energy needs,” said Don Mosier, chief executive of East Kentucky Power Cooperative, which serves 1.2 million residents and businesses. Mosier's remarks appear in an August 6 letter to the U.S. Energy Department.
PJM said its proposals seek to protect residential customers from paying higher energy prices because of the expansion of data centers.
PJM also proposed creating a registry for data centers and other very large energy users that would track the location and electricity use of those operations.
For the data centers that do not supply their own power, PJM proposes that it temporarily shut off electricity to the sites in periods of extreme stress on the grid to avoid rolling blackouts. It does not, however, currently have the authority to curtail power to those sites and would require the cooperation of individual state governments, PJM said.
Rapid growth in data centers is becoming a political headache in PJM’s territory, including Virginia, home to the world’s largest collection of data centers. A growing number of residents fear they will be saddled with the rising costs to provide power to data center complexes they view as noisy and intrusive.
