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Data Center Boom Drives Power Demand Surge in PJM Region

Data centers are driving up power demand and utility bills in the PJM region. New measures are being explored to manage this growth and protect consumers.

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Data Center Boom Drives Power Demand Surge in PJM Region

A new report by Monitoring Analytics reveals a significant surge in peak power demand, largely driven by data center expansions. This increase, projected to reach nearly 12,000 megawatts by next summer, is raising concerns about utility bills and potential power shortages in the PJM region.

The Natural Resources Defense Council warns that PJM consumers could face utility bill increases totaling up to $163 billion by 2033, primarily due to escalating data center power demand. This trend is reflected in PJM's 2025 long-term load forecast, which predicts a peak load growth of 32,000 MW from 2024 to 2030, almost entirely from data centers.

Already, more than $16 billion in payments to power companies has been passed on to utility customers in the 13-state region due to data center demand. This figure is expected to rise, as power demand from tech companies operating data centers recently drove up PJM's July capacity auction by $7.2 billion, an 82 percent increase. An analysis by the Union of Concerned Scientists further highlights this issue, finding that $4.3 billion in transmission expansion costs were passed on to consumers in seven PJM states due to data center projects.

A significant contributor to this increased demand is 'Data Center Alley' in Northern Virginia, which lies within PJM's territory.

To address these challenges, PJM is exploring solutions such as a 'bring-your-own-generation' requirement for data center developers, encouraging them to install their own power generation and storage. Additionally, PJM is considering directing utilities to inquire about data center proposals in other grid regions to prevent 'double counting'. These measures aim to manage the growing power demand from data centers and mitigate potential impacts on utility customers and grid stability.

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