ERCOT (largest US power grid operator) plans to curb electricity supply to large data centers during peak demand shortages
PJM Interconnection, the largest US power grid operator, has announced plans to curtail electricity supply to large data centers during periods of grid shortages beginning in June 2027, as AI-driven demand strains the nation's power infrastructure.
As electric grids across the US struggle to manage surging power demands from new data centers, PJM said it will restrict electricity to data centers and other large users when the grid is under stress. The decision reflects mounting pressure on grid operators to secure additional generating capacity. By 2035, data centers are projected to consume nearly four times more electricity than they currently do.
The curtailment program will initially apply only to newly connected data centers and other customers with electricity demand of 50 megawatts or more. PJM is simultaneously conducting an auction to bring additional generating capacity online.
The approach mirrors existing demand response initiatives that have operated for decades, typically involving large industrial users such as manufacturing facilities. Under these programs, customers who agree to reduce or temporarily lose power during grid stress periods receive compensation for the disruption. Participants generally receive advance notice ranging from 30 minutes to several days before curtailments take effect.
The policy is expected to encourage new data centers to develop their own on-site power generation. Facilities without dedicated power sources may need to rely on backup generators, which are substantially more expensive to operate and produce higher pollution levels. Data centers typically favor diesel generators because the fuel is widely available and can be stored on-site. However, US federal regulations limit non-emergency use of these generators to 50 hours per year, with only 10 hours annually permitted for testing and maintenance.
Vantage Data Centers recently faced scrutiny over its reported coordination with Virginia environmental regulators to challenge a study claiming that diesel backup generators at a 96-megawatt facility in Northern Virginia cause tens of millions of dollars in annual public health damages to nearby communities.
PJM has drawn growing criticism in recent months as surging data center demand increases pressure on its power grid, driving sharp rises in wholesale electricity prices across its network, which serves approximately 67 million customers.