PJM Proposes Cutting Power to Data Centers During Peak Demand

The largest U.S. grid operator proposed cutting power to newcomers during periods of high demand in a May 6 white paper. PJM Interconnection serves over 67 million consumers across its operational area. Its infrastructure is now strained by data center expansion and the accelerated retirement of dispatchable generation due to environmental policy and economics, according to the operator’s “Powering Reliability Through Market Design” document.

An unprecedented surge in demand driven by the rapid expansion of large-load data centers and broader economy-wide electrification is one of three drivers of grid strain. The others are the accelerated retirement of dispatchable generation and significant supply chain and permitting frictions that have extended the time required to bring new resources online.

Data centers are the primary drivers of rising electricity consumption, according to the U.S. Energy Information Administration. The EIA expects electricity demand to grow by 1% in 2026, potentially outpacing new energy supply.

The result is a transition from an era of managing surplus to an era of managing scarcity, the white paper states. Construction timelines have doubled, with a new natural gas turbine plant now requiring at least four years under optimistic assumptions from financial investment decision to commercial operation.

The average environmental review takes over four years to complete. Permitting requirements contribute considerably to long development times, the document notes.

The white paper highlights three paths toward keeping the grid solvent. Path A aims to stabilize markets through long-term forward commitments either through mandatory Load Serving Entity hedging requirements or through a PJM-administered, long-term procurement, such as a tiered, multiyear capacity market.

Path B would institute differential reliability. This could be implemented geographically or by customer class, with residential and native loads insulated from curtailment while unbacked new large load additions are curtailed first. Under that model, data centers using preexisting supply would be subject to throttling during periods of high demand while residential consumers who contributed to existing supply would be prioritized.

C aims to partially transition grid use to a supply-and-demand pricing model while maintaining long-term contract optionality. The operator would pursue a deliberate, phased shift of revenue recovery from the capacity market combined with long-term forward energy contracting requirements to protect consumers from increased energy price volatility and to support investment.

Constrained supply is at the heart of the concerns. This shortage largely stems from the many regulatory reviews required to break ground on energy developments. Venezuela announced emergency measures to stabilize its power grid after electricity consumption hit a nine-year high, in a separate development highlighting global strains on electricity systems.

>The result is a transition from an era of managing surplus to an era of managing scarcity. — PJM Interconnection white paper, May 6, 2026 (Daily Caller) >Construction timelines have doubled.