Trump administration pushes tech firms to underwrite AI data center power

The White House, joined by governors from several northeastern and mid‑Atlantic states including Pennsylvania, Ohio and Virginia, unveiled a plan today to compel major technology companies to underwrite new electricity generation needed for rapidly expanding AI data centers. The proposal centers on a non‑binding statement of principles from the National Energy Dominance Council that would direct PJM Interconnection LLC to hold an emergency wholesale auction to secure long‑term capacity contracts.

Under the proposal, the auction would award 15‑year contracts for new generation capacity. The administration says those contracts would provide roughly $15 billion in financeable revenue to support construction of new power plants. Winning bidders would be required to pay for contracted capacity over the full 15‑year term regardless of actual usage, delivering stable cash flows that backers argue are crucial in a market marked by price volatility and generator bankruptcies.

Officials frame the intervention as an emergency response to looming shortfalls. Data‑center power demand in PJM’s footprint is projected to rise sharply and has been described as set to triple by 2035, creating a mismatch between the long lead times for new generation and the fast pace of data‑center buildouts. Retail electricity costs have already shown recent upward movement, with a 7 percent jump in September and a 10.5 percent increase year‑to‑date from the prior January through August, cited by officials as part of the urgency.

PJM distanced itself from the announcement. Spokesman Jeffrey Shields said by email that PJM “was not invited to the event they are apparently having tomorrow and we will not be there.” The grid operator’s absence highlights immediate legal and operational questions: it is unclear what authority the administration has to compel PJM to run an emergency auction, how PJM would fit the solicitation into its existing market rules, and how interconnection, permitting and pricing mechanics would be handled.

The plan names the region’s largest cloud and AI companies as the primary targets. Amazon, Microsoft, Alphabet, Meta, OpenAI and others are listed as potential bidders whose long‑term commitments would underwrite new capacity. Company spokespeople and executives have signaled mixed enthusiasm. A Google spokesperson said, “We agree data centers should pay their own way. For us, it is table stakes.” Amazon’s general counsel, David Zapolsky, praised the administration’s approach in a LinkedIn post, calling it a way to tackle “America’s outdated grid challenges.”

Analysts caution that the proposal would reshape the economics of capacity markets. Fifteen‑year off‑take contracts would reduce financing costs for developers and attract investment, accelerating the buildout of gas, renewables and storage assets that are otherwise squeezed by merchant risk. But forcing private customers to underwrite capacity also risks legal challenges and could shift costs into corporate budgets; whether those costs are passed to consumers, absorbed by shareholders, or prompt further on‑site generation investment by firms remains open.

Longer term, the episode underscores a larger trend: the electrification and centralization of AI workloads is creating concentrated demand that stresses regional grids and regulatory frameworks designed for a different era. How PJM, state regulators and federal authorities reconcile market design, reliability and industrial policy will determine whether the proposal becomes a blueprint for managing the grid impacts of AI or a contested intervention that reshapes power markets.