PJM Moves Ahead With Plan to Manage Data Center Growth as Grid Pressures Rise
The rapid expansion of AI-driven data centers is forcing a major shift in how large electric grids plan for new demand—and PJM Interconnection, the largest U.S. grid operator, is now moving forward with a framework intended to better manage the surge of data center connection requests.
PJM operates the power grid across 13 states and Washington, D.C., covering the world’s largest concentration of data centers—especially in Northern Virginia. In recent months, PJM has been facing a growing challenge: data center growth is arriving faster than new generation and transmission can be added, raising concerns about reliability and long-term capacity.
Data centers are driving most of the demand growth
According to PJM’s forecasts, data centers are expected to account for nearly all of the roughly 32 gigawatts (GW) of demand growth anticipated on its system through 2030. That’s a massive change for a grid region that already serves major population centers and a large industrial base.
The concern isn’t just long-term planning. PJM has warned that without significant additions of new supply, the region could face power shortages as early as 2027. That timeline matters to everyone involved in the data center ecosystem—developers, utilities, EPCs, and equipment suppliers—because grid access and power delivery schedules can determine whether projects move forward or stall.
Member vote rejects fast-path proposals—but the issue isn’t going away
PJM’s member organizations—utilities, power producers, and large energy users—recently voted on multiple proposals related to a plan often described as a “fast path” approach for connecting data centers. Those proposals were largely rejected, but PJM leadership indicated the organization still intends to finalize a revised plan by December.
In other words: the vote didn’t eliminate the need for action. It simply reflects how complicated this topic has become—balancing speed of interconnection with grid reliability, fairness to existing customers, and the practical reality of power system limitations.
Earlier versions of the fast-path concept included ideas such as requiring certain data center developers to bring their own power supplies and potentially curtail operations during grid emergencies, such as extreme hot or cold periods. Those requirements did not appear in later versions, and PJM’s final roadmap is still taking shape.
Why this matters for the market
For the broader power market, the stakes are showing up clearly in price signals. PJM’s capacity auction prices have climbed more than 1,000% over the last two auctions, reflecting tightening supply conditions and a market trying to incentivize new generation investment.
In theory, higher capacity prices encourage developers to build new power plants, add fast-start resources, or upgrade existing assets. In practice, real-world barriers remain. PJM and market participants have pointed to high costs and supply chain delays as factors contributing to longer construction timelines for new generation projects. That creates a difficult gap: demand is moving quickly, while supply additions often take years.
Consumers are already feeling the early effects. PJM region power bills began rising last summer, and the debate over who pays for new infrastructure—data center developers, ratepayers, or a combination—has become central to energy policy discussions.
What it means for data centers, contractors, and onsite power
From a Generator Data perspective, this is exactly the type of grid dynamic that increases interest in onsite and behind-the-meter power strategies, especially for large load projects. As interconnection queues grow and grid upgrades take time, operators often explore a mix of solutions:
Temporary power during construction and commissioning
Hybrid approaches that include onsite generation
Load management strategies to reduce peak demand exposure
More deliberate planning around fuel availability and long-term service support
This is also why we’re seeing continued demand for industrial-scale generation—both diesel and natural gas—along with supporting infrastructure like switchgear, paralleling gear, and thermal management.
The bottom line
PJM’s next steps will be closely watched by data center developers and the contractors and suppliers who support them. The grid is not standing still, and neither is the data center market. The coming months will likely shape how quickly large load projects can connect—and what new expectations emerge around self-supply, curtailment, and reliability planning.
For the power generation industry, it’s another clear signal: the data center buildout is no longer a future trend. It’s a current operational reality that is already influencing grid rules, pricing, and project decision-making.
Source: Reuters (Nov. 19/20, 2025) — “Biggest US power grid operator moving forward with plan to manage data centers”
https://www.reuters.com/business/energy/biggest-us-power-grid-operator-moving-forward-with-plan-manage-data-centers-2025-11-19/