PJM Interconnection warned that surging data center growth, power plant retirements, and permitting delays are pushing the nation’s largest regional grid toward supply shortages and may require curtailing electricity to new large-load customers during peak demand periods.
By yourNEWS Media Newsroom
The nation’s largest electric grid operator is weighing emergency reliability measures that could include reducing electricity access for newly connected data centers during periods of elevated demand, according to a newly released market design proposal highlighted in a report by the Daily Caller News Foundation.
PJM Interconnection, which oversees the transmission grid serving more than 67 million people across multiple states, warned that rapid growth in electricity consumption combined with generation retirements and development delays is creating mounting reliability concerns across its service territory.
In its “Powering Reliability Through Market Design” paper, PJM identified “unprecedented surge in demand driven by the rapid expansion of large-load data centers and broader economy-wide electrification” as a central factor contributing to grid pressure. The operator also cited “the accelerated retirement of dispatchable generation due to environmental policy and economics” along with supply chain bottlenecks and permitting delays that have slowed the deployment of new energy infrastructure.
Federal energy data cited in the discussion show that data centers have become a leading contributor to rising electricity use nationwide. According to the U.S. Energy Information Administration, electricity demand is expected to continue increasing in coming years, raising concerns that new generation capacity may not be added quickly enough to meet consumption growth.
“The result is a transition from an era of managing surplus to an era of managing scarcity,” the PJM document states, pointing to extended timelines for bringing new generation online. The report added that “construction timelines have doubled,” noting that even under favorable conditions a new natural gas turbine facility may require at least four years between investment approval and commercial operation.
The operator also highlighted lengthy environmental reviews as a major obstacle to expanding generation capacity. According to the Council on Environmental Quality, environmental impact reviews routinely take more than four years to complete before projects can proceed.
PJM outlined three possible approaches to maintain reliability as demand accelerates.
One proposal would increase long-term market commitments through mandatory hedging requirements for Load Serving Entities, or through expanded multiyear procurement mechanisms administered directly by PJM. Load Serving Entities are companies or organizations authorized to sell electricity to end users.
A second proposal would create what PJM described as “differential reliability,” under which certain categories of customers would face different levels of service protection during supply shortages.
“This could be implemented geographically (different states or zones procuring different levels of reliability) or by customer class,” the paper states, “with residential and native loads insulated from curtailment while unbacked new large load additions are curtailed first.”
Under that framework, large new electricity users such as data centers relying on existing grid supply could face restrictions during peak demand events, while residential consumers and existing customers would receive priority access to available electricity. Forecasts cited from S&P Global indicate global data center power demand could nearly double by 2030.
The third proposal would move portions of PJM’s current structure toward a more market-driven pricing system while still maintaining long-term contracting options intended to reduce volatility for consumers and encourage investment in additional generation.
PJM argued that constrained supply remains the central problem facing the grid. Industry groups including the Consumer Energy Alliance have similarly pointed to permitting requirements and regulatory delays as major barriers to expanding domestic energy infrastructure.
The report also noted that the Trump administration has pursued actions aimed at accelerating permitting approvals and reducing regulatory burdens tied to energy development, including efforts to reverse the Obama-era endangerment finding that enabled federal regulation of carbon emissions under the Clean Air Act. Related carbon regulatory frameworks affecting industry and emissions oversight have also been scrutinized in associated federal guidance and compliance materials, including documentation tied to emissions regulation.
Congress has also considered legislative changes to speed permitting timelines. The House of Representatives previously approved the Standardizing Permitting and Expediting Economic Development Act, which would alter procedures under the National Environmental Policy Act. However, the measure remains stalled in the Senate, according to a separate analysis.
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