AI data centers overwhelm the largest US power grid; rolling blackouts may affect 67 million people in 13 states.

Driven by the surge in AI demand, PJM Interconnection, the largest grid operator and nonprofit in the US, is facing a severe supply crisis. This power network, spanning 13 states and serving 67 million people, has reached its capacity limit, not only driving up residential electricity costs but also putting many regions at risk of rolling blackouts.

According to a Wall Street Journal report on June 13, PJM is currently on the verge of supply-demand imbalance. The tech industry’s almost “bottomless” hunger for electricity for AI data centers has caused demand to grow far faster than the grid’s capacity. Former Federal Energy Regulatory Commission Chairman Mark Christie pointed out that a few years ago such reliability risks were confined to remote areas, but now “the risk is just around the corner.”

PJM currently expects annual electricity demand growth of 4.8% for the next decade, which is an astonishing challenge for a system that has seen years of stagnating demand. Meanwhile, aging power plants are shutting down faster than new ones can be built. If hit by extreme heat waves or deep freeze disasters, PJM may be forced to implement rotating blackouts to protect grid infrastructure from damage.

The market has reacted sharply to this trend. Consumers are expressing anger over rate increases, and governors from states like Pennsylvania have petitioned regulators to cap prices. At the same time, tech giants such as Amazon, Alphabet, and Microsoft are fiercely opposed to proposed rules that would force data centers to build their own power sources or go offline during peak periods.

Supply-demand mismatch raises risk of grid collapse

With data centers growing exponentially, PJM is increasingly unable to keep up with surging demand. Especially in Northern Virginia’s “Data Center Alley,” where the influx of companies like Amazon has pushed local electricity demand to unprecedented levels.

According to Dominion Energy data, the company has received requests for data center power totaling over 40 gigawatts—enough to supply electricity to at least 10 million households, double the total capacity of its Virginia network by the end of 2024. By 2039, the system’s peak demand is expected to double.

While demand is skyrocketing, supply is shrinking. Due to environmental policies in various states, coal and natural gas units in places such as Illinois and Maryland are being shuttered one after another. In addition, cheap natural gas from the shale revolution and falling wind and solar costs have made it economically unsustainable to maintain traditional coal and nuclear plants.

Political divisions and management turmoil intensify challenges

PJM faces not only technical, but also political, challenges. Its service area covers 13 states, whose governments have widely differing policies on power generation types, permitting, and price regulation.

Pennsylvania Governor Josh Shapiro complained to federal regulators in 2024, seeking to curb price hikes. New Jersey Governor-elect Mikie Sherrill even vowed to declare a “state of emergency” on her first day in office to lower utility costs. Furthermore, due to dissatisfaction with PJM’s market mechanisms, the governors of Pennsylvania, Virginia, and Maryland have even threatened to withdraw from the organization.

Complicating matters further, long-time PJM CEO Manu Asthana will step down at the end of 2025, with no successor yet determined. For now, board chairman David Mills is serving as interim CEO. While Mills stressed that reliability challenges are not insurmountable, he acknowledged that policy and investment coordination are needed to align generation capacity with demand growth.

Regulatory battles and tech giant standoff

To maintain grid stability, PJM proposed last September to cut off data center power during extreme grid stress. The proposal faced strong opposition from the tech sector. According to the Wall Street Journal, Amazon, Google, and Microsoft see such proposals as discriminatory and are concerned about the business risks of outages.

These tech giants have put forward counterproposals, requesting that "building private power plants" or "going offline during peaks" be voluntary actions. With tech companies, power suppliers, and regulators unable to reach a consensus, the rulemaking process stalled in November last year.

Currently, grid independent monitor Joseph Bowring has filed a complaint with the Federal Energy Regulatory Commission. In a letter written for Monitoring Analytics, he warned that unless data centers can provide their own power, PJM’s future challenge will not be how to ensure reliability, but how to “allocate outages.”

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