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Reuters
2 days ago
- Business
- Reuters
Power costs soar in PJM region as data center demand spikes
NEW YORK, Aug 7 (Reuters) - Homes and businesses in the largest U.S. electric grid - operated by PJM Interconnection - could face rate increases of up to 60% over the next five years as the energy needs of Big Tech's data centers intensify, according to analysts and consumer advocates. PJM covers the largest amount of data center demand in the world, and the region is becoming a test case for how AI's energy needs will hit homes and businesses, particularly as new electricity supplies are slow to be added. The latest energy auction held in July by the PJM Interconnection to cover electricity needs on peak demand days soared to $329 a megawatt day, a roughly 1,000% jump from two years ago. Those prices funnel down to power bills in PJM's territory, which stretches from the Mid-Atlantic region westward, covering all or part of 13 states and the District of Columbia. Analysts at ICF, a global consulting and technology services firm, said customer power bills in PJM could increase residential retail rates between 30% and 60% by 2030, largely due to rising costs caused by the capacity auctions, which determine the price paid to power plant owners to run overtime during extremely high power use. "This outcome underscores PJM's critical need for capacity, driven largely by surging demand from data centers, which is expected to outpace new generation additions," ICF said. In the short term, PJM expects the recent auction to have a year-over-year impact of 1.5% to 5% on utility bills starting June 2026. That would account for the capacity portion of bills alone, whereas utility spending on power lines and other build-outs and services to meet growing loads will also hit customer bills. With the rest of demand sources in PJM largely flat, data centers are pretty much driving all of those rising costs, said John Quigley, a senior fellow at the Kleinman Center for Energy Policy at the University of Pennsylvania. "They are ground zero in terms of why we're seeing rising electricity costs," Quigley said. Data centers make up more than 90% of the new power demand PJM estimates it will see by the end of the decade, the grid operator has said in filings. 'While economic growth is welcome in the PJM footprint, we recognize the impact that data centers are having on the system," PJM said in a statement. "We're going to seek to address some of these challenges around reliability and cost with data center owners, consumers and all of our stakeholders, including our states, in the near future." On the supply side, rising power bills on PJM turf are caused by multiple factors, and capacity auctions are one component. The prices from those auctions in recent years take effect about a year out, so price impacts from the latest one in July will take effect next summer. Power bills are also affected by spending by utilities to build power lines and upgrade systems to deliver electricity to homes and businesses. As data centers drive power demand higher and spur the need to build new generation capacity, consumer advocates said they fear residential customers are subsidizing the AI ambitions of wealthy corporations. Some of the biggest utilities in PJM, including AEP (AEP.O), opens new tab and Dominion(D.N), opens new tab , this year announced significant increases to capital expenditure plans to meet new data center demand. That spending is paid for mostly by the public. As a way to soften the financial blow to customers, some utilities, including ones in New Jersey and Maryland, began to offer rebates. Those measures, however, are mostly temporary, and long-term fixes remain unclear if the pace of new power demand outstrips supply. 'We have residential customers providing massive subsidies to some of the wealthiest corporations in the world to support their data centers,' said David Lapp, the head of Maryland's Office of People's Counsel, a state agency that advocates for residential utility consumers. 'It's just a massive transfer of wealth from small customers to data centers.'
Reuters
01-08-2025
- Business
- Reuters
Explainer: How prepared are U.S. grid operators for extreme heat this summer?
Aug 1 (Reuters) - Grid operators across the U.S. are revamping their forecasting methods, introducing reforms to power markets and streamlining interconnection processes to quickly connect more energy to the grid, as a potent combination of extreme weather and data center growth elevate power demand this summer. High temperatures and the expansion of power-hungry data centers are set to push 2025 summer power consumption to higher levels than the past four summers, federal regulators said earlier this year. Heat waves have already strained the power grid in parts of the country in recent weeks. 'Extreme weather events are becoming more common, and we are adjusting our planning for that,' said Dan Lockwood, PJM Interconnection spokesperson. Here's how grid operators are positioned to meet demand this summer, and longer-term measures they are taking to shore up the system. Heading into the summer, PJM had forecast power consumption to peak at just over 154,000 MW. The company, which is the largest grid operator in the U.S. and serves one in five Americans, said it is prepared to meet that demand, but warned that it could touch an all-time high of 166,000 MW in an extreme scenario. In that case, it would call on customers to reduce their power use in exchange for compensation. PJM has been streamlining its interconnection process to bring new power onto the grid. It has also fast-tracked projects that do not require extensive grid upgrades to connect to the system to get them online quicker. California Independent System Operator estimated it has a power surplus of 1,451 MW this summer, measured against the industry-standard, one in 10 year emergency event. That marks a reversal from three years ago, when it estimated a shortfall of 1,700 MW. CAISO has also been moving to quickly add new power to its grid, with around 25 GW added over the last five years, said Dede Subakti, vice president of system operations. Much of this has been battery storage, which helps balance supply and demand, bringing CAISO's total pool of battery storage to 11 GW. 'With all this additional capacity, we're sitting pretty good with 2025 summer,' Subakti said. However, the grid could still see shortfalls if a prolonged heat-wave affects the entire West, or if potential wildfires damage power transmission lines, CAISO said. ISO New England anticipates electricity demand will touch 24,803 MW this summer under normal weather conditions - and potentially 25,886 MW in case of extended heat waves - but expects to have adequate power to meet that. ISO-NE is one of the grid operators that is evaluating changes to its capacity auction to bolster grid reliability. This includes transitioning to a 'prompt' auction, held shortly before the power is needed, compared with the current practice of holding them three years in advance. In addition, it is looking to move to two seasonal commitment periods per year for the auction, to tackle the distinct risks that summer and winter demand pose to the grid. It intends to file an initial proposal for this new market structure with federal regulators before year end. Midcontinent Independent System Operator predicted that peak demand in its footprint could reach nearly 123 GW this summer, with roughly 138 GW of available power generation to meet that. Like other grid operators, however, it warned that extreme weather events still present a risk to the grid. MISO, which has been operating near its minimum reserve margin requirement since 2022, has also been making changes to its wholesale markets as grid risks grow, including assessing the reliability of its infrastructure on a seasonal basis. It implemented a 'reliability-based demand curve' in its latest auction, under which the price of electricity resources increases as the grid approaches its minimum requirements. MISO has added around 31 GW of nameplate power to its grid from 2020 through mid-2025, with another 10.9 GW estimated for this year. Meanwhile, nearly 11 GW of power resources have or are set to retire between 2020 through early 2026.
Bloomberg
29-07-2025
- Business
- Bloomberg
The Boom in AI Is Stressing the Largest US Power Grid
By Welcome to our guide to the commodities markets moving the global economy. Today, reporter Naureen S. Malik discusses how the booming growth of AI data centers is straining the largest US power grid. In terms of electricity, a huge swath of the US encompassing 13 states was, for many years, the proverbial land of plenty. From Illinois to New Jersey to North Carolina, the area covered by PJM Interconnection LLC had more than enough power to get by.
Dominion Post
29-07-2025
- General
- Dominion Post
Hampshire County Commission: Say no to transmission projects
MORGANTOWN — The Hampshire County Commission is urging its counterpart in Monongalia County to take a public stand against high-voltage transmission projects looking at West Virginia as a means to an end. It's exceedingly likely that request will be granted Wednesday, when the Monongalia County Commission takes up a resolution regarding the MidAtlantic Resiliency Link project. In a letter dated July 15, the commissioners in Hampshire County say they're 'deeply concerned' with both the 500 kV MidAtlantic Resiliency Link (MARL) and 750 kV Valley Link projects and ask Monongalia County to help present a 'united front' before grid operator PJM Interconnection and the West Virginia Public Service Commission. 'We propose forming an informal coalition of affected counties and towns to share information, coordinate participation in regulatory proceedings and press for solutions that protect our property values, environment and quality of life,' the letter states. MARL is a 105-mile stretch of high-voltage transmission lines that will run from Greene County, Pa. to Frederick County, Va. Up to 13 miles of that project could run through Monongalia County depending on the route selected. Other West Virginia counties in the potential path include Preston, Mineral, Hampshire and Jefferson. The Valley Link project is a 261-mile high-voltage line that would run from Putnam County to Frederick County, Md. This project could impact more than a dozen counties in West Virginia, including Putnam, Kanawha, Roane, Calhoun, Braxton, Lewis, Upshur, Barbour, Tucker, Preston, Grant, Hardy, Hampshire and Jefferson. As one of three counties that could potentially see both transmission projects clear a 200-foot swath through the local countryside, the Hampshire County Commission says it believes there are better alternatives than 'carving through untouched landscapes.' One alternative, the letter explains, is the promotion of local power generation where the energy is actually needed. 'Hampshire County is deeply concerned that the 500 kV MARL project and the 765 kV Valley Link project would erect massive 160-foot transmission towers across our scenic ridges and valleys, primarily to carry electricity from generation in West Virginia and Pennsylvania to far-off data centers in Louden County, Virginia. These lines would impose significant burdens on our communities without providing any meaningful local benefit.' The comments out of Hampshire County are very similar to those shared by commissioners here when they sat down with representatives from NextEra Energy Transmission MidAtlantic earlier this month. 'I don't see the benefit we're getting in Mon County at all,' Commissioner Tom Bloom said. 'You have a job to do, but I don't like it on the backs of Mon County residents, and that's what I'm worried about.'
Yahoo
28-07-2025
- Business
- Yahoo
If you live in one of these 13 states, you might have a higher electric bill next year. Blame data centers.
For a large swath of the US, data centers are driving energy prices higher. Wholesale electricity prices are up 22% from 2024. Ratepayer advocates warn that Big Tech's energy demand is hitting consumer wallets. Your electric bills may have shot up in recent months, and you might be tempted to blame your roommate, who never turns the lights off, or your old window air conditioner unit. It's not because of your roommate. It's not your window unit. It's actually Big Tech's fault. Customers of the biggest regional power grid operator in the US could see their bills go up next year, largely due to skyrocketing demand for electricity coming from AI data centers. Last week, PJM Interconnection closed its annual capacity auction with prices for wholesale electric capacity up 22% from 2024, another record-breaking year. As a result, monthly electric bills in PJM's territory, which covers 67 million customers, could increase up to 5% next year, the grid operator said. PJM Interconnection territory spans 13 states from the Midwest to the East Coast— including all or parts of Delaware, Indiana, Illinois, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia, and Washington, D.C. Every year, PJM's summer auction determines the cost of wholesale electricity for the following year. Though its territory doesn't cover the entire US, the energy industry looks at the PJM auction as a bellwether for electricity prices for the entire country. PJM's territory includes Data Center Alley in Northern Virginia, home to the world's biggest concentration of data centers. It also includes areas of the country where data centers are rapidly expanding, such as Columbus, Ohio. The grid operator identified data center expansion as the primary driver of demand in its territory, which caused the jump in wholesale electricity prices. After a decade of little to no growth, electricity demand in the US is expected to grow 2.5% annually through 2035, driven largely by data centers, according to the Bank of America Institute. Utility bills are rising faster than the pace of inflation, per the US Energy Information Administration. That trend is expected to continue through the next year. In Maryland, People's Counsel David Lapp has been urging state and federal regulators to intervene on behalf of residential utility customers and small businesses. "We are witnessing a massive transfer of wealth from residential utility customers to large corporations—data centers and large utilities and their corporate parents, which profit from building additional energy infrastructure," said Lapp. "Utility regulation is failing to protect residential customers, contributing to an energy affordability crisis," he continued. Got a tip for this reporter? Contact Ellen Thomas at ethomas@ Read the original article on Business Insider Solve the daily Crossword
