In August, the PJM Interconnection put out a “conceptual proposal” outlining potential new rules that would clear space on the nation’s largest grid by forcing large power users — namely, giant data centers — to cut back on electricity consumption during shortages. Hyperscalers had just begun endorsing the idea, popularized in a landmark Duke University paper, that occasionally dialing down data centers could help make the most of the existing grid — and potentially allow more server farms to come online before new power plants can be built.
However, in their public comments the big tech companies balked at the pitch, repeatedly accusing PJM of “exceeding” its authority. And last week, six of the biggest power users that would be subject to the rules — the tech giants Amazon, Google, and Microsoft, and the utilities Calpine, Constellation, and Talen — proposed an alternative.
Acknowledging the need for load flexibility, they pitched the idea that data centers cut back on power usage just 24 to 100 hours per year, and only on a voluntary basis. Aniruddh Mohan, an energy associate at the consultancy The Brattle Group, said that could be sufficient, though it’s no guarantee.
“If sufficient large loads volunteered to provide demand response, it is possible that 24 to 100 hours per year of demand response could be sufficient for reliability under many conditions,” Mohan told Latitude Media via email. “If it turns out we still need more supply, it’s unclear how much more additional generation and storage can be brought online within the next five years.”
PJM issued a forecast last month calling for at least five gigawatts of load flexibility by 2030. While flexibility “conceptually is a good thing,” former Federal Energy Regulatory Commission member Allison Clements explained on a recent Latitude Dispatch about PJM, it’s essentially a stop-gap measure for a grid plagued by bottlenecks and delays, and “not ideal from an efficiency or an economic perspective.”
As a secondary measure, the companies called on PJM to establish a new procedure that would trigger data centers to go off-grid and switch to on-site back-up generators. The proposal also calls for setting up a new procurement process that would lock in today’s current high prices for seven years, giving developers an extra incentive to invest in new clean, firm power plants to meet surging demand.
But they also acknowledged that the system may ultimately need less new generation than the hype today suggests.
Grid operators’ load-growth forecasts tend to come from transmission owners. In Texas, the ERCOT receives those estimates but modifies the forecasts based on factors such as how successfully large power users, like data centers, managed to come online. The PJM currently does not have that same kind of check on its forecasts.
The hyperscalers’ pitch called for implementing corrections based on a range of factors, including those that have nothing to do with generation, such as the availability of the microchips needed over the next five years to actually construct proposed data centers. ERCOT, for example, reduces all new data center demand by about half, based on the average number of proposed new server farms that entered into service between 2022 and 2024.
PJM has signaled interest in adjusting its load forecasting, including giving state regulators the chance to review and provide feedback before the grid operator finalizes load forecasts. “As the load forecast is driving these reliability considerations, this is definitely worth examining closely,” Mohan said.
But revising estimates’ enough to bend the curve on how much power is needed on the grid “is somewhat wishful thinking,” said Daniel King, a research fellow at the right-leaning Foundation for American Innovation.
“Even if, frankly, load forecasts do improve, it won’t be by the nearly double-digit gigawatt amounts that will really tip the scales or change the fact that we’re in the situation of pretty great resource inadequacy,” King told Latitude Media.
One thing the proposal’s nine-page slidedeck does not include: an idea for how PJM should speed up interconnections, a key consideration for bringing new power sources onto the grid.
But other pitches submitted to PJM do mention the interconnection queue. The grid operator has set a deadline of December for submitting a final proposal to the Federal Energy Regulatory Commission.
In the meantime, different parties have until October 14 to submit counter proposals. Then the PJM will negotiate a deal that draws from the range of solutions put forward. Once that blended proposal is public, stakeholders will have time to comment before PJM holds a final vote on what goes to FERC.
The talks come amid mounting political pressure on PJM to curb soaring electricity prices. Pennsylvania Gov. Josh Shapiro held a 13-state summit two weeks ago to convene governments from every state in the PJM system and discuss ways to pressure the grid operator to bring new generation online faster and at lower rates. If that fails, the Democrat said, Pennsylvania may consider exiting the grid operator altogether and forming its own statewide market like those in New York and California.
In New Jersey, meanwhile, Democratic gubernatorial nominee Mikie Sherrill has campaigned heavily on cracking down on the PJM if elected next month.
