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Data centers may face temporary power cuts to prevent blackouts on largest US grid
PJM Interconnection, the operator of the largest electricity grid in the United States, has announced it will cut power to data centres and other large users during shortages after an auction to secure extra generating capacity fell short of what was needed. The move reflects growing strain on the grid from the rapid expansion of data centres, whose electricity consumption is projected to quadruple by 2035, and follows criticism of PJM's handling of new generation and demand in recent months.
The curtailments will not begin until June 2027 and will apply only to data centres of 50 megawatts or larger, with affected customers compensated and given advance notice ranging from 30 minutes to several days, similar to existing demand-response schemes used for large industrial users. PJM is holding a further auction for new capacity, but in the meantime many data centres are expected to invest in on-site power or rely on backup diesel generators, which are costlier and more polluting; federal rules cap such generator use at 50 hours a year for demand response. PJM's territory spans 67 million customers from Virginia to Illinois, and wholesale electricity prices there have nearly doubled over the past year, a rise its independent market monitor has largely attributed to data centre demand.
In short
- PJM will cut power to large data centres during shortages from June 2027
- Move follows a shortfall in new generating capacity secured at auction
- Data centre demand blamed for near-doubling of PJM electricity prices
Steelman: both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Grid stability cannot be compromised, and data centres are the appropriate choice for managed curtailment because their operations are inherently flexible—unlike households or hospitals, computations can be rescheduled. The policy offers fair compensation and merely applies pressure that already exists for other large industrial users, creating incentives for data centres to invest in backup generation during this temporary shortage whilst new capacity comes online.
The case against
PJM's responsibility is ensuring adequate capacity, not rationing power from essential sectors; penalising data centres for the grid operator's planning failures is neither fair nor effective. This policy perversely encourages expensive, polluting diesel backup generators instead of investment in clean generation, and it disadvantages an economically vital sector that other better-managed grids will attract, shifting competitiveness and growth elsewhere at great cost to the domestic economy.
Explained simply
PJM Interconnection operates the largest electricity grid in the United States, serving about 67 million people across a region stretching from Virginia to Illinois. When electricity supply falls short of demand, the grid can fail and people lose power. The grid has come under increasing strain as demand for electricity has grown rapidly.
Data centres use enormous amounts of electricity, and their rapid expansion has become a significant driver of demand on the PJM grid. Electricity consumption from data centres is expected to quadruple by 2035. This surge in demand is one reason electricity prices in the PJM region have nearly doubled over the past year.
PJM is moving to temporarily cut power to the largest data centres during shortages to prevent widespread blackouts. After an auction to secure additional generating capacity fell short of what was needed, PJM decided it must manage demand through these cuts. Data centres will receive advance warning ranging from thirty minutes to several days, and will be compensated for the interruptions.
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