Driven by a surge in AI demand, PJM Interconnection, the United States' largest grid operator and a non-profit organization, is confronting a severe supply crisis. This power network, which spans 13 states and serves 67 million people, is approaching its load limit, not only driving up residential electricity costs but also plunging many areas into the risk of rolling blackouts.
According to a report from the Wall Street Journal on the 13th, PJM is currently on the brink of supply-demand imbalance. The technology industry's seemingly "bottomless" thirst for electricity to power AI data centers has led to a growth rate in demand that far outpaces the grid's carrying capacity. Former Federal Energy Regulatory Commission Chairman Mark Christie stated that just a few years ago, this reliability risk was in the distant suburbs, but now "the risk is right at our doorstep."
Currently, PJM forecasts an average annual electricity demand growth of 4.8% over the next decade, a staggering challenge for a system that has experienced stagnant demand growth for years. Simultaneously, the closure of aging power plants is outpacing the construction of new ones. Should an extreme heatwave or deep freeze occur, PJM might be forced to implement rolling blackouts to prevent damage to grid infrastructure.
The market reaction to this trend has been intense. Consumers are expressing outrage over rising rates, and governors in states like Pennsylvania have complained to regulators, demanding price controls. Meanwhile, tech giants such as Amazon, Alphabet, and Microsoft are strongly opposing proposed rules that would mandate data centers build their own power sources or go offline during peak hours.
The mismatch between supply and demand is escalating the risk of grid collapse. As data centers grow exponentially, PJM appears overwhelmed in its response to the demand surge. Particularly in the "data center alley" of Northern Virginia, local electricity demand has reached unprecedented levels due to the heavy presence of companies like Amazon.
Data from Dominion Energy shows that the company has received power requests from data centers exceeding 40 gigawatts—enough to power at least 10 million households, which is double the total capacity of its Virginia network by the end of 2024. The system's peak demand is projected to double by 2039.
While demand is skyrocketing, the supply side continues to shrink. Influenced by state environmental policies, coal and natural gas units in states like Illinois and Maryland have been shutting down. Furthermore, cheap natural gas from the shale revolution and declining costs for wind and solar power have made traditional coal and nuclear plants economically unsustainable.
The challenges facing PJM are not just technical but also deeply political. Its service area crosses 13 states, where government policies on generation types, construction permits, and price regulation diverge significantly.
Pennsylvania Governor Josh Shapiro filed a complaint with federal regulators in 2024, seeking to control price increases. New Jersey Governor-elect Mikie Sherrill even vowed to declare a "state of emergency" on her first day in office to lower utility costs. Additionally, dissatisfied with PJM's market mechanisms, the governors of Pennsylvania, Virginia, and Maryland have threatened to withdraw from the organization.
Further complicating the situation, PJM's long-time CEO Manu Asthana departed at the end of 2025, and a successor has not yet been finalized. Board Chairman David Mills is currently serving as interim CEO. While Mills emphasizes that the reliability challenges are not insurmountable, he also acknowledges the need to coordinate policy and investment to ensure power generation can keep pace with demand growth.
To maintain grid stability, PJM proposed a plan last September that would require cutting power to data centers during times of extreme grid stress. This proposal met with strong opposition from the tech industry. According to the Wall Street Journal, Amazon, Google, and Microsoft argued that such proposals were discriminatory and expressed concerns about the business risks associated with power cuts.
These tech giants put forward a counter-proposal, suggesting that "building dedicated power plants" or "going offline during peak hours" should be voluntary. As technology companies, power suppliers, and regulators failed to reach a consensus, the rule-making process stalled last November.
Currently, the grid's independent market monitor, Joseph Bowring, has filed a complaint with the Federal Energy Regulatory Commission. In a letter written on behalf of Monitoring Analytics, he warned that unless data centers can provide their own power, the future challenge for PJM will not be ensuring reliability, but rather "allocating blackouts."
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