The Trump administration is advocating for a significant investment of $15 billion in new power generation capacity from technology firms, specifically targeting the expansive PJM electricity grid, which serves over 65 million people across 13 states. This initiative aims to address the anticipated tripling of power demand from data centers over the next decade, even urging companies to bid on long-term contracts despite potential lack of immediate need for the additional capacity.
The White House, alongside several state governors, is pushing PJM, the grid operator, to conduct an auction for 15-year contracts for this new generating capacity. However, PJM has expressed reluctance, noting that while it is reviewing the administration’s recommendations, its internal assessments signal skepticism towards the mandated expansions. Spokesman Jeffrey Shields stated, “We don’t have a lot to say on this,” emphasizing a lack of involvement in the associated plans.
Electricity rates in the region, especially around data center hotspots like northern Virginia, have already risen by 10% to 15% this year. According to Monitoring Analytics, PJM’s peak load has increased by 10% over the past decade and is projected to rise another 6.5% by 2027. This surge is partly attributed to the growing energy consumption of tech companies investing in artificial intelligence.
The rise in electricity costs can also be linked to escalating natural gas prices, which contribute to approximately 60% of the price increase expected in 2025. With the increasing demand from data centers, grid operators find themselves pressured to enhance capacity, although the long timelines and high costs associated with building new fossil fuel plants deter many utilities from committing to these projects.
Amidst these challenges, technology firms have increasingly turned to renewable energy sources as a versatile and economically viable alternative. Solar energy, for instance, can be deployed more swiftly and affordably compared to traditional fossil fuel plants, allowing for a phased approach that aligns better with the rapid expansion of data center infrastructure.
