The Trump administration wants the world’s largest power grid to add $15 billion in new power plants — and it wants tech companies to pay for it, even if it doesn’t need the capacity.
The White House and governors of several states in the region want grid operator PJM to hold an auction for a 15-year contract for new generating capacity. The government has said it wants technology companies to bid on the contract even if it ultimately does not require power for data centers. Demand from data centers is expected to increase nearly tripled over the next decade.
PMJ said it reviews the “principle statement” and will release the results of the month’s planning process that wants to add new capacity to the grid.
The statement was irrelevant, and behind the scenes, PJM didn’t seem fazed about the administration trying to force its hand. “We don’t have to say much about it,” PJM spokesman Jeffrey Shields said toward Bloomberg yesterday. “We are not invited to the event that will take place tomorrow and we will not be there.”
PJM Interconnection, which covers 13 states in the Mid-Atlantic and Midwest, serves more than 65 million people and includes a data center hotspot in northern Virginia. Electricity rates in 2025 will increase by 10% to 15% in the region compared to the previous year.
In the last decade, the peak load of PJM has been add 10%according to Monitoring Analytics, and is expected to increase another 6.5% in 2027.
Much of the blame has been laid at the feet of technology companies and data center operators, who have used increasing amounts of power for AI.
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Natural gas prices are also to blame. PJM is heavily dependent on fossil fuels, and their prices are rising. Monitoring Analytics, PJM’s independent monitor, says that about 60% of the 2025 price increase is the result of high fossil fuel prices.
Grid operators have been tied up as data centers increase demand for electricity after more than a decade of zero growth.
Building a new fossil fuel power plant is a multi-year proposition at a cost of hundreds of millions of dollars. Many utilities and power providers are hesitant to commit to these timelines and costs. If the AI boom fails, it could be left with unprofitable power plants built for decades.
Technology companies, which are not usually in the power business, are turning to renewable energy, which is cheaper, more modular, and faster to deploy. Solar and batteries already early winner. A typical solar farm can be built in about 18 months, and because it can be built in phases, it can start sending power before it is complete. That’s closer to data center construction, allowing companies to manage risk on the same timeline.