The Largest US Grid Wants to Switch Off Data Centres First

Grid operators have spent two years describing data-centre demand as a planning problem. PJM Interconnection, the largest grid in the United States, has now written down what it wants to do about it, and the document reads less like planning than triage. New large loads that have not brought their own generation would be first in line for curtailment. The market monitor's response is that the plan should be thrown out.

What PJM filed

On 13 August 2026 PJM proposed to FERC a framework that Reuters summarised as forcing data centres to use back-up generators when grid supply nears dangerously low levels, with utilities directed to reduce or transfer demand from data centres and other large users ahead of any action cutting off traditional consumers. PJM said it lacks authority to curtail such sites itself and needs state cooperation. In its own description, the Interim Resource Adequacy Service applies to new large loads that have not brought their own new capacity or had it covered by the companion Reliability Backstop Procurement; a large-load registry would track them; and from the 2029/2030 auction, new large loads without their own supply would be excluded from the auction's demand calculation. PJM attributes 30 GW of the 32 GW of demand growth it forecasts from 2024 to 2030 to data centres, and says the model is consistent with the White House's build, bring or buy pledge.

The mechanics, as reported by POWER magazine from the filing: a large load is a site with cumulative peak of at least 50 MW, including affiliated facilities within a mile; the rules apply to loads entering service after 1 June 2027; and PJM asked FERC to act by 12 October. The board has warned large-load demand could rise about 70 GW by 2038 while roughly 15 GW of generation has retired since 2022.

The shortfall and the auction

The trigger is arithmetic. PJM's 2028/2029 base residual auction, held from 30 June to 7 July, cleared 6,831 MW short of the reliability requirement at the FERC-approved cap of $325 per MW-day; the previous auction had cleared 6,623 MW short at $333.44. PJM's companion filing on 31 July proposes a one-time backstop procurement to cover the gap, with FERC approval requested by 29 September and the auction opening on 30 September, clearing over up to six weeks before the December capacity auction.

The monitor's bill

PJM's independent market monitor, Monitoring Analytics, published its quarterly state-of-the-market report on 13 August. It found that data-centre load in the capacity market raised the total cost of wholesale power by $11.11 per MWh, or 9.7%, in the first half of 2026, from $103.40 to $114.50, excluding effects on energy and transmission costs; total wholesale cost rose 50.3% year on year and capacity costs rose 207%. In a 31 August presentation the monitor calculated that existing and forecast data-centre load raised capacity-market revenues by a combined $29.4 billion across the 2025/26 to 2028/29 auctions, adding: 'This total will continue to grow until the issues associated with the addition of large data center loads are addressed.'

On 3 September the monitor filed a protest asking FERC to reject the interim service filing in its entirety, calling it 'a convoluted, inconsistent, confusing proposal', having already protested the backstop procurement on 21 August. NYU's Institute for Policy Integrity told FERC the same week that PJM had not shown the backstop auction is just and reasonable, arguing that bilateral contracting would allocate costs more precisely. The proposals did not reach stakeholder consensus and were directed by PJM's board; intervenors include the Maryland Public Service Commission, the Illinois attorney general and New Jersey's rate counsel.

Who benefits, who is at risk

Beneficiaries: existing generators and any developer that already holds capacity; households, if curtailment priority actually shields them. At risk: data-centre developers with 2027 connection dates that fall under the new rules, and, if the monitor is right about cost allocation, the ratepayers the plan claims to protect.