PJM advances plan to manage surge in data center interconnections, sets December deadline

PJM Interconnection, the largest regional grid operator in the United States covering 13 states and the District of Columbia, said on November 19 that its membership will advance a plan to address an unprecedented wave of interconnection requests from hyperscale data centers and other major energy consumers. The board rejected several rapid path proposals earlier this month, but indicated it will pursue a broader framework that officials aim to finalize by December.

The debate at the center of PJM’s deliberations is elemental to grid planning and consumer costs. PJM officials warned that data centers could account for nearly all of an expected 32 gigawatts of demand growth in the region by 2030. Without significant additions to transmission capacity and new generation, the operator flagged the risk of supply shortfalls that could undermine reliability and raise costs for households and businesses.

The practical choices are stark. One option is to require large customers to bring firm onsite power or accept curtailment during system emergencies. Another is to allocate the cost of network upgrades to the projects that impose new burdens on the grid. A third approach would spread costs broadly across utility customers through rates and regulatory mechanisms. Each choice alters investment incentives and the distribution of cost and risk between corporate power users, incumbent generators, utilities and residential customers.

Market implications are immediate. If data centers are required to fund more of the network upgrades, project economics could shift, slowing some developments or pushing operators to pursue alternative locations. If costs are socialized, utilities and regulators could face pressure over rate increases that would affect households. Transmission developers and generators will be watching for clear signals from PJM, because commitments to build long lead time projects hinge on how upgrade costs are recovered and who bears the financial risk.

The board’s decision to advance a framework, rather than adopt rapid path measures, signals a caution about moving too quickly on rules that could lock in winners and losers across a diverse membership. Rapid interconnection routes sought by some market participants promised speed but raised concerns about cost allocation, queue fairness and long term grid stability.

Policymakers will also be monitoring the outcome. State regulators who approve rates and siting decisions, and federal entities that oversee wholesale grid policy, could be drawn into disputes over cost allocation and reliability standards as the transformation in data center demand continues.

PJM’s December timeline imposes a tight schedule for a region facing compressed planning horizons. The operator and stakeholders now confront a practical test of how to integrate a concentrated surge in load while maintaining reliable service and equitable cost sharing. The decisions made in the coming weeks will help determine whether the region can accommodate rapid digital economy growth without imposing disproportionate costs or risks on residential customers.