FAQ: Strengthening the Grid for Today & Tomorrow

Electricity demand is rising rapidly from a combination of factors, primarily the proliferation of large energy users, particularly data centers that support artificial intelligence and the broader digital economy.

Data centers are at the heart of the country’s expanding digital economy, including the rapid development of artificial intelligence. PJM is working with state and federal leaders to serve these facilities without decreasing system reliability or significantly increasing costs.

Data centers require large amounts of electricity and thus are by far the largest driver of load growth in the PJM footprint. We are working directly with our member utilities and other entities that deliver electricity to homes, businesses and institutions to understand how much of the planned data center development will actually materialize and when. This will allow us to best forecast their energy needs so that the transmission system is built out efficiently to support this digital infrastructure in a way that is fair to all consumers.

PJM cannot build power plants itself or simply order them up. Some regulated states in the PJM region require their utilities to submit plans that establish a certain level of generation capacity in state; other deregulated states rely heavily on the PJM capacity market to incentivize investment in new generation. Adding supply will require all states to encourage the addition of new generation while removing obstacles to those resources getting built.

PJM has been clear that federal and state leaders need to expedite the construction of high-voltage transmission lines to move power where it’s needed. PJM has approved over $5.9 billion in recent transmission upgrades to support this. States also must reform local permitting processes so that approved projects don’t languish in legal battles.

PJM’s recent capacity auctions have cleared at higher prices, sending a direct financial signal to developers that more supply is needed immediately. This price signal is the most effective tool to incentivize the construction of new power generation.

But the pace of electricity growth is outstripping the market’s ability to attract new generation. PJM, in collaboration with its members and stakeholders, including the White House Council of Energy Dominance and the governors of the 13 states served by PJM, have committed to running an additional “backstop” procurement in 2026 to obtain new supply to fill the current gap.

The PJM Board of Managers has outlined a series of actions to be taken by PJM and its stakeholders in 2026 to address the multiple challenges of integrating new data centers and other large load customers onto the grid while preserving electricity system reliability and affordability for the 67 million people PJM serves.

The Board’s course of action will address the need for new power generation that can come online quickly and is coupled with options for new large load customers whose electricity demand can be curtailed in times of system need. Both of these goals will also help address the supply-and-demand imbalance that has the potential to threaten grid reliability and is currently driving up wholesale costs that can impact consumer bills. The Board proposes:

• Significant load forecasting improvements and an increased role for states
• Avenues for new large loads to bring their own new generation or enter into a connect and manage framework, subject to earlier curtailment
• Creation of an accelerated interconnection track for state-sponsored generation projects
• Immediate initiation of a backstop generation procurement process to address short-term reliability needs
• A review of PJM markets to assess how they can best work in combination to support investment