The rapid expansion of AI data centers is colliding with power-grid constraints across the eastern U.S.
PJM Interconnection, which operates the electric grid serving 67 million people across 13 states and the District of Columbia, said demand continues to grow faster than new generation.
PJM’s latest capacity auction again fell short of reliability targets and highlighted the challenge of matching electricity supply with surging demand. While it secured enough capacity to meet most projected needs for 2028 to 2029, it was still 6,831 megawatts short of its reliability requirement.
Monitoring Analytics, PJM’s independent market monitor, estimated the auction will add about $6.3 billion in costs across the region over the next three years, according to Bloomberg News.
While accelerating data-center construction is a major driver, PJM said delayed power projects, generator retirements and slower-than-expected additions of new capacity also contributed to the supply-demand imbalance.
The growing strain is prompting policymakers to rethink how large AI facilities connect to the grid.
In Texas, Gov. Greg Abbott recently directed state regulators to ensure data centers pay for the electric infrastructure they require and called for future facilities to bring their own power while reducing costs for residential customers. Abbott said he will pursue legislation next year to codify those requirements.
New York has paused construction of massive data centers while it studies their impact on electricity demand, while other states and local governments are weighing new restrictions.