Grid Stability Measures

Following a failed auction to increase generating capacity, PJM Interconnection announced it will curtail electricity to data centers and other large consumers during periods of shortage. These restrictions, scheduled to begin in June 2027, specifically target facilities with a capacity of 50 megawatts or more. This demand response strategy mirrors long-standing programs used by manufacturers, where affected customers receive financial compensation and advance notice ranging from 30 minutes to several days based on demand forecasts.

The largest electrical grid in the U.S. has struggled to cope with an onslaught of data centers. Now, after an auction to add more generating capacity fell short, the grid’s operator, PJM Interconnection, has said it will cut off data centers and other large users during power shortages.

The decision arrives as the breakneck pace of data center construction has grid operators scrambling to generate power. By 2035, data centers are expected to use 4x more electricity than they do today.

PJM won’t start curtailing supply until June 2027, and the cuts will only apply to data centers that are 50 megawatts or larger.

Projected Energy Demands

The grid operator is struggling to keep pace with a construction surge that is expected to drive data center electricity consumption up fourfold by 2035. This pressure has already impacted the market, with wholesale electricity prices nearly doubling over the past year. PJM's independent market monitor has identified the proliferation of data centers as a primary driver behind these escalating costs across a territory serving 67 million customers from Illinois to Virginia.

The grid operator is running another auction for new generating capacity. Similar to other demand response programs, which have existed for decades and typically include large users like manufacturers, the customers who have their power cut will be compensated.

Such programs typically give customers advance notice, ranging from 30 minutes to a few days, depending on forecasted demand. The move will likely spur many new data centers — and potentially existing ones — to set up their own sources of on-site power.

Those that don’t will probably rely on backup generators, which tend to be costlier to run and frequently more polluting.

On-Site Power Alternatives

To avoid curtailment, operators may shift toward independent on-site power sources. Many currently rely on diesel backup generators due to fuel availability and storage ease, though these are often more expensive and polluting than primary grid power. Federal rules limit the use of such generators to 100 hours annually for emergencies and maintenance, with an additional 50 hours permitted per year specifically for demand response events.

Many data centers favor diesel generators since the fuel is widely available and can be stored on-site. Federal regulations allow such generators to be used for up to 50 hours per year for demand response events, and up to 100 hours per year for events like emergencies and maintenance.

This week, Vantage Data Centers came under fire for its apparent coordination with Virginia environmental regulators to cast doubt on a report that said diesel backup generators could contribute to tens of millions of dollars in annual health damages for people living near a 96 megawatt data center in Northern Virginia. PJM has come under fire in recent months for the way it has managed new generating capacity and large new users, including data centers.

The grid operator’s territory runs from Virginia to Illinois, covering 67 million customers.

Environmental and Regulatory Friction

The reliance on diesel backups has sparked conflict regarding public health. In Northern Virginia, a report suggested that generators at a 96 megawatt facility could cause tens of millions of dollars in annual health damages. Vantage Data Centers recently faced criticism for allegedly coordinating with state environmental regulators to undermine these findings. Meanwhile, PJM itself faces scrutiny over its management of new users and generating capacity.

Over the last year, wholesale electricity prices have nearly doubled, and PJM’s independent market monitor blamed data centers for much of the increase. When you purchase through links in our articles, we may earn a small commission.

This doesn’t affect our editorial independence. Tim De Chant is a senior climate reporter at TechCrunch.

Source and methodology

This Intelligence Daily briefing preserves the key facts published by TechCrunch AI and organizes them into a fuller, reader-friendly report. Read the original reporting.