PJM Proposes Mandatory Power Cuts for AI Data Centers to Prevent Soaring Electricity Prices

PJM Interconnection has proposed adjustments to the management mechanism for large electricity consumers. If AI data centers do not secure sufficient generation resources in advance, they may face power reductions or even be forced to exit the grid during periods of tight supply or peak demand. This measure aims to prevent widespread blackouts and avoid passing capacity costs onto residents. PJM anticipates that by 2038, the additional electricity demand from data centers will increase by approximately 70 gigawatts, while around 15 gigawatts of generation capacity has exited its coverage area since 2022. PJM plans to hold a "Reliability Backstop Auction" in September to fill an approximate 7-gigawatt gap, with the associated costs borne by the data centers. It also encourages them to sign long-term power contracts with generation companies to secure energy supply.