PJM Says Power Supply Is lagging Data Center Demand as Pa. Pols Press for Answers

New power plants are not arriving fast enough in Pennsylvania to keep pace with data centers and other large electricity users, leaving the region’s once ample supply margin increasingly thin, an official of PJM Interconnection told lawmakers last week.

Stephen Bennett, PJM’s senior manager for regulatory and legislative affairs, said at an Oct. 6 House Energy Committee hearing that the grid operator has moved from managing a surplus to “an era of managing scarcity.” 

He cited rising demand, plant retirements, and the time needed to permit, equip and build replacement generation. The condition is expected to persist under current projections, he said.

PJM’s July auction for the June 2028 through May 2029 delivery year procured 6,831 megawatts less capacity than its reliability requirement, even after the price reached its $325 per megawatt-day ceiling. Only 525 megawatts of new generation and upgrades cleared. Capacity is a commitment to be available when needed.

In the auction, PJM secures commitments from power plant owners to be available when the grid needs them three years out, and pays them for that promise.

Here’s what it all says about the state of the current data center buildout: 

The largest U.S. grid cannot buy enough committed power supply for 2028 even at its price ceiling, and only 525 megawatts of new plants showed up to sell. Data center demand is being approved and forecast faster than generation is being built, and the gap now falls on regulators, ratepayers and the data centers themselves.

Bennett conceded the shortfall. Asked by a state lawmaker, Rep. Heather Boyd, whether the warnings from other witnesses overstated the threat, he said he would not characterize them that way. 

“Our last several capacity auctions have fallen short of our reserve margins,” he said. “We are not 100 percent successfully navigating it.”

PJM’s January forecast calls for summer peak demand to rise about 85,000 megawatts over 15 years, to about 241,000 megawatts by 2041. Bennett said data centers are the primary driver. The forecast is a planning estimate, and he warned that utilities’ projections can change as projects advance, shrink or fall away. PJM is tightening review of large-load forecasts, including checks for duplicate requests and state review.

Bennett said PJM has processed more than 500 gigawatts of proposed projects since 2020 through its transitional queue and new study cycle. More than 100 gigawatts have signed interconnection agreements. Those agreements precede construction. Bennett said permitting and siting are the most frequent barriers once a project has its interconnection agreement. The Federal Energy Regulatory Commission on Sept. 24 rejected Oklo’s complaint after PJM dropped its 750-megawatt Virginia project from the study cycle in August, leaving the developer to reapply in a later cycle.

The interconnection operator proposed a one-time reliability backstop procurement to seek new supply after the auction shortfall. FERC accepted the proposal in part but suspended it for five months, pushing the planned procurement into 2027. Bennett said PJM also is pursuing bilateral deals between large customers and developers. Both routes depend on plants being built before demand arrives.

PJM has separately proposed rules for new large loads that do not secure enough power of their own. Under the proposed interim service, utilities would be directed to reduce or transfer those customers’ demand during severe shortages before traditional customers face curtailment. That could complicate plans by data center operators promising continuous service. The proposal still requires federal approval.

The Pennsylvania Public Utility Commission’s consultant, Synapse Energy Economics, projected that by 2030 the risk of supply-related outages could reach nearly six times PJM’s planning standard in its central scenario. 

That figure is a modeled loss-of-load expectation. PUC Chairman Stephen M. DeFrank said the state needs more generation. Patrick Knight, a Synapse vice president, said demand reductions timed to critical hours can improve reliability as much as added supply.

House Energy Committee Chair Elizabeth Fiedler said rising demand and slow supply growth could leave households vulnerable to outages. She pressed witnesses on what lawmakers could do and later pointed to siting reform and renewable projects as ways to move additional power onto the grid. Republican Chairman Martin Causer called for state energy policy focused on adding generation.

Rep. Arvind Venkat asked for specific legislative recommendations rather than another warning about a looming gap. Bennett said demand response, efficiency and virtual power plants can reduce demand as effectively as adding generation, and that Pennsylvania needs both fossil and renewable supply. 

Earlier, answering Causer, he said Pennsylvania could ease permitting and siting delays and offer investors policy certainty. He also said PJM cannot require a data center to bring generation as a condition of connecting to a local utility; that decision belongs to states. Independent Market Monitor Joseph Bowring challenged PJM’s view of its authority and argued that large loads should secure their own generation.

Rep. Joshua Kail blamed past state energy policy for constraining supply, and Bennett said Pennsylvania must weigh generation, environmental and economic goals together. By the close of the hearing, Kail identified permitting reform as a measure he thought could draw bipartisan support. The immediate question for PJM is whether its new rules and procurement can turn proposed megawatts into operating supply before large-load demand reaches the grid.